INSEAD Library

Includes bibliographical references and index

Digitized

Contents Japan's Lost Decade Japan's Lost Decade Illustrations ..................................................................... x ... Preface to Revised and Expanded Edition ...........................xu1 Preface t o the English (2002) Edition ................................. xv Chapter 1: MACROECONOMIC OF THE 1990s ANALYSIS ............ 7 High Growth in the Past ..........................................7 The 1990s ...............................................................9 Demand or Supply? ............................................. 11 What Type of Demand? ....................................... 13 The "Abnormality" of Demand Fluctuations ......... 18 Investment ......................................................... 21 Investment to Increase Production Capacity. 25 and Stock Adjustment .................................... The Recovery of 1995-1996 ................................. 29 The Fiscal Policy Error of 1997 ..............................31 The Prolonged Consumption Slump ........................ 39 Chapter 2: BADDEBTS THE JAPANESE ECONOMY............ 49 AND Money Supply and the Credit Crunch ..................... 51 The Bubble and Bad Debts: Banks ........................ 57 The Bubble and Bad Debts: Firms ........................60 The Background to the Real Estate Boom ............... 69 Monetary Policy and Prudential Policy .................. 71 The Credit Crunch of 1997-1 998 ........................ 76 Chapter 3: EXCHANGE RATES............................................ 83 The Fixed Exchange Rate System and the Floating Exchange Rate System .................................... 84 The Determination of Foreign Exchange Rates: Short.run. Mid-run and Long-run ..................... 86 Purchasing Power Parity ....................................... 89 The Pre-war Japanese Economy ........................... 96 The Appreciation of the Yen over the Past 25 Years 98 Theories Blaming the High Yen for Japan's Economic Doldrums ........................... 102 Chapter 4: JAPAN'S MANUFACTURING AND NONMANUFACTURING INDUSTRIES.....................107 Small and Mediurfi Firms. and the Self-employed ................................................ 114 An Historical Turning-point .................................I27 The Agriculture ............................................... 122 Structural Stagnation .......................................... 128 Chapter 5: THE LABOR MARKET THE "ICEAGE" ............ 135 IN Japan's Rising Unemployment Rate ..................... 135 The Mismatch in Labor Market ........................... 144 Labor Mobility .................................................. 146 Underemployment ............................................. 150 The Risk of Falling into a Deflationary Spiral ...... 154 Chapter 6: THE AGING SOCIETY OF AND FISCAL POLICY ...... 159 Ill-advised Fiscal Reconstruction ........................ 160 The Alledged Burden of Debt .............................. 165 The National Burden Ratio ................................. 170 The Social Security ............................................. 174 Structural Reform .............................................180 Chapter 7: THE FUTURE ................................................... 187 Has Japan's Potential Growth Rate Actually Declined? ................................................... 188 Demand and Economic Growth ........................... 198 The Japanese Economy of the 1990s .....................210 What Must be Done? .......................................... 214 Chapter 8: JAPAN'S LOSTDECADE: WHAT HAVE LEARNED WE AND WHERE WE HEADING? ..............................219 ARE Introduction ...................................................... 220 The Japanese Economy during the 1990s ............ 222 Macroeconomic Policies ....................................228 228 Fiscal Policy ......................................................... Monetary Policy ................................................... 229 Japan's Potential Growth: The Importance of Demand-Creating Innovation ........................237 Conclusion ...................................................... 240 References Index .................................................................... 255 265 ...........................................................................