Restoring Japan's Economic Growth

by Adam Posen

Overview

Will the Japanese government take the decisive but manageable policy actions needed to bring about economic recovery? Despite claims to the contrary, macroeconomic expansion has yet to be seriously tried in Japan. Criticism of current Japanese macroeconomic and financial policies is so widespread that the reasons for it are assumed to be self-evident. In this volume, Adam Posen explains in depth why a shift in Japanese fiscal and monetary policies, as well as financial reform, would be in Japan's own self-interest. He demonstrates that Japanese economic stagnation in the 1990s is the result of mistaken fiscal austerity and financial laissez-faire rather than any supposed structural failures of the "Japan Model." The author outlines a program for putting the country back on the path to solid economic growth—primarily through permanent tax cuts and monetary stabilization—and draws broader lessons to be learned from the recent Japanese policy actions that led to the country's continuing stagnation. The book will be a useful supplementary text for both undergraduate and postgraduate courses in macroeconomics, comparative political economy, Japan or East Asian studies, public finance, and international relations.

Product Details

ISBN-13:	9780881322620
Publisher:	Peterson Institute for International Economics
Publication date:	09/25/1998
Series:	Policy Analyses in International Economics Ser.
Edition description:	New Edition
Pages:	186
Product dimensions:	5.90(w) x 8.90(h) x 0.40(d)
Age Range:	18 Years

About the Author

Dr. Posen, the President of the Peterson Institute for International Economics, has specialized in macroeconomic and monetary policy, resolution of financial crises, central banking issues, and the economies of Western Europe, Japan, and the United States. Dr. Posen brings a distinctively global perspective to macroeconomic policy analysis and forecasting. He has written about the financial and economic challenges faced by the European Union following the adoption of the euro and the lasting impact of Japan's economic crisis of the 1990s, while providing counsel directly to the Japanese government in Tokyo. Leading up to the successful London G-20 summit of 2009 during the global financial crisis, he consulted for the UK Cabinet Office.

Read an Excerpt

Will the Japanese government take the decisive but manageable policy actions needed to bring about economic recovery? Despite claims to the contrary, macroeconomic expansion has yet to be seriously tried in Japan. Only one-third of the announced stimulus packages of 1992-97 were actually undertaken. In addition, monetary expansion has been insufficient to prevent deflation. Actual stimulus packages in the form of permanent tax cuts should be 4 percent of GDP before the end of calendar year 1998, and the price level must be stabilized.

Criticism of current Japanese macroeconomic and financial policies is so widespread that the reasons for it are assumed to be self-evident. In this volume, Adam Posen explains in depth why a shift in Japanese fiscal and monetary policies, as well as financial reform, would be in Japan's own self-interest. He demonstrates that Japanese economic stagnation in the 1990s is the result of mistaken policies of fiscal austerity and financial laissez-faire rather than any supposed structural failures of the "Japan Model." The author outlines a program for putting the country back on the path to solid economic growth- primarily through permanent tax cuts and monetary stabilization-and draws broader lessons to be learned from recent Japanese policy actions that led to country's continuing stagnation.

Dr. Posen's objective analysis and comparative examples of policies from across the OECD are enhanced by the report's timeliness. His book should be required reading for Japan's business and academic communities, US foreign policy and financial players, and central bank and treasury officials. As a deep analysis of a critical episode in economic policymaking, the book will be a useful supplementary text for both under- and post-graduate level courses in macroeconomics, comparative political economy, Japan or East Asian studies, public finance, and international relations.

From the Backcover

Table of Contents

(I) Introduction;
(II) Diagnosis-Macroeconomic Stagnation, not Structural Change;
(III) Fiscal Policy Works When It Is Tried;
(IV) The Short and the Long of Fiscal Policy;
(V) Mounting Downside Risks-Financial and International;
(VI) A Program for Japanese Economic Recovery;
(VII) Recognizing Policy Mistakes, Not Blaming the Model.
Technical Appendix..

(*) Formerly advertised as How Much is Enough for Japan?

What People are Saying About This

Robert Alan Feldman

Provocative . . . A major contribution to the debate on Japanese policy. . . Even creative destructionists can agree with the Posen Program.

Isamu Miyazaki

The . . .analysis and proposals are very interesting, useful, and timely...
— (Isamu Miyazaki, Special Advisor of the Daiwa Institute of Research and former Minister of Economic Planning Agency, Japan)

Robert Solomon

A thorough and compelling analysis of and prescription for Japan's economic weakness.

Benjamin Friedman

Japan's persistent stagnation is among the most important problems confronting the world economy today, and Adam Posen's treatment of it is the best I have seen. His analysis is right on the mark, and his policy porposals bear attention at the highest level of the Japanese government.
— (Benjamin Friedman, Harvard University)

Matthew Miller

The doomsday scenario (scaring officials in Washington and Tokyo) is laid out . . . by Adam Posen

Editorial Reviews

[Posen] offers a trenchant examination of Japanese fiscal policy during the 1990s... He persuasively debunks the argument that fiscal stimulus cannot work in Japan.

Foreign Affairs - Richard N. Cooper

Japan's persistent stagnation is among the most important problems confronting the world economy today, and Adam Posen's treatment of it is the best I have seen. His analysis is right on the mark.

Benjamin Friedman and William Joseph Maier Professor of Political Economy Harvard University

Its analysis is convincing, and its policy recommendations are... sensible. I strongly recommend it to economists and policymakers alike. I... hope that Japanese policymakers have the wisdom to heed his advice.

Journal of Economic Literature - Charles Yuji

An excellent book.
— The Financial Times

Marvin Wolf

Its analysis is convincing, and its policy recommendations are...sensible. I strongly recommend it to economists and policymakers alike. I...hope that Japanese policymakers have the wisdom to heed his advice.
— Journal of Economic Literature

Charles Yuji Horioka