Restoring Japan's Economic Growth

By Adam S. Posen

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.

• Format: Paperback
• Language: English
• ISBN: 0881322628
• ISBN13: 9780881322620
• Release Date: September 1998
• Publisher: Peterson Institute for International Economic
• Length: 214 Pages
• Weight: 7.20 lbs.
• Dimensions: 0.4" x 6.0" x 9.1"
• Grade Range: Postsecondary and higher

Customer Reviews

Keynes is alive and well and living in Japan

This is an excellent little book. Posen, an increasingly influential monetary economist, gives us his view on what is wrong and what needs to be done in Japan. While this effort was published in late 1998, the diagnosis and medication prescribed are the same now as then. In Posen's view, all but one of the economic stimulus packages unveiled in the 1990s was equivalent to pouring money down the drain. Government money either wasn't spent at all because regional and municipal governments are bust or money was thrust at wasteful construction industries which add nothing to GDP. Also, monetary policymakers have decided that their new independence means they should do exactly the opposite to what everyone outside the BOJ thinks they should do. So policy is in a state of paralysis.Posen argues that Japan needs aggressive stimulus, both through fiscal and monetary policy channels. In his view, there is nothing terribly wrong with Japan - a very different view from consensus. He also shows that BOJ fears of igniting inflation if they loosen monetary policy aggressively are complete nonsense. This isn't a happy read for amateurs. It's quite in depth and needs some knowledge of the dismal science. It's very mainstream or Keynesian, just in case you were wondering. But it's a good read nonetheless.