Does Japan offer any lessons for the United States?

This article compares Japan's experience during the 1980s with U.S. prosperity in the 1990s, trying to discern the extent of similarities and differences. It then provides an overview of how Japanese policymakers responded once economic conditions began to deteriorate. Japanese policy has been...

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Bibliographic Details
Published in:New England economic review 2001-01 (3), p.3
Main Author: Browne, Lynn Elaine
Format: Article
Language:English
Subjects:
Economic activity
Economic aspects
Economic conditions
Economic statistics
GDP
Gross Domestic Product
Inflation
Inflation rates
Interest rates
International agreements
Investment companies
Management
Monetary policy
Prices
Psychological aspects
Securities markets
Stagnation
Stock exchanges
Stock-exchange
Studies
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Summary:This article compares Japan's experience during the 1980s with U.S. prosperity in the 1990s, trying to discern the extent of similarities and differences. It then provides an overview of how Japanese policymakers responded once economic conditions began to deteriorate. Japanese policy has been harshly criticized by U.S. economists; so Japan's mistakes may provide lessons for policymakers here and elsewhere. The article does not attempt to break new ground in this regard; so those familiar with Japan's circumstances will find little that is new, although possibly some differences of interpretation. On balance, the conclusion is reassuring. Although similarities exist between Japan's economic performance in the 1980s and U.S. experience in the late 1990s, land values, as well as stock prices, rose very rapidly in Japan. Bank lending backed by land also rose very rapidly. This is a critical difference, as the subsequent decline in Japanese land values crippled the Japanese banking system and economic activity generally.
ISSN:0028-4726
2163-5986