The Japanese Economy, 2e, Second

by Hoshi, Ito

ISBN: 9780262538244 | Copyright 2020

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Summary The second edition of a comprehensive account of all the major aspects of the Japanese economy, substantially updated and expanded.

This textbook offers a comprehensive, rigorous but accessible account of all the major aspects of the Japanese economy, grounding its approach in mainstream economics. The second edition has been extensively revised and substantially updated, with new material that covers Japan's period of economic stagnation between 1991 and 2010. The first edition, published in 1992, focused on Japan as a success story of catch-up economic development; this edition reflects the lessons learned from Japan's Lost Two Decades.

After presenting the historical background, the book begins with macroeconomics, studying growth and business cycles. It then covers essential policy issues, with new material that takes into account the Japanese banking crisis of 1997–1998 and the global financial crisis of 2008–2009, discussing financial regulation, monetary policy, and fiscal policy. It goes on to examine saving, demography, and social security in light of Japan's ongoing demographic transition; industrial organization; labor markets; international trade and international finance; and the Japan–U.S. relationship. A new chapter offers a detailed analysis of the Lost Two Decades, synthesizing and applying concepts discussed in previous chapters and offering insights into such issues as successful catch-up growth, demographic shifts, and credit booms and busts.

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cover (pg. i)
Title (pg. iii)
Contents (pg. vii)
Preface (pg. xvii)
Preliminary Notes (pg. xxi)
Names of Japanese Persons (pg. xxi)
Abbreviations (pg. xxi)
Acknowledgements (pg. xxiii)
First Edition (Ito) (pg. xxiii)
Second Edition (Ito and Hoshi) (pg. xxiii)
Ch 1 - An Introduction to the Japanese Economy (pg. 1)
Reference (pg. 4)
Ch 2 - History of the Japanese Economy (pg. 5)
2.1 Introduction (pg. 5)
2.2 The Tokugawa (Edo) Era: 1603–1868 (pg. 6)
2.3 Money in Tokugawa Japan (pg. 8)
2.4 Foreign Pressure and the Fall of Tokugawa (pg. 9)
2.5 The Meiji Restoration (pg. 10)
2.6 Economic Development and Growth in Meiji Japan (pg. 13)
2.7 Money, Prices, and the Exchange Rate in Meiji Japan (pg. 21)
2.8 Imperialism and Japan (pg. 23)
2.9 The War Economy (pg. 26)
2.10 Transformations of Industrial Structure (pg. 28)
2.11 International Trade (pg. 29)
2.12 Japan as a Model for Economic Development (pg. 34)
2.13 Summary (pg. 35)
Appendix 2.A: The Rice Futures Market (pg. 36)
Appendix 2.B: Guide to Data (pg. 37)
References (pg. 38)
Ch 3 - Economic Growth (pg. 41)
3.1 Introduction (pg. 41)
3.2 Postwar Recovery: 1945–1950 (pg. 45)
3.3 Major Macroeconomic Problems after the War (pg. 51)
3.4 Rapid Economic Growth: 1950–1973 (pg. 56)
3.5 Growth Slowdown: 1973–1987 (pg. 65)
3.6 Information Technology and Economic Growth (pg. 67)
3.7 Abenomics (pg. 68)
3.8 Summary (pg. 70)
Appendix 3.A: Guide to Data (pg. 71)
References (pg. 73)
Ch 4 - Business Cycles, and Boom and Bust (pg. 75)
4.1 Introduction (pg. 75)
4.2 Dating of Business Cycles (pg. 78)
4.3 Business Cycles and Growth (pg. 82)
4.4 Understanding Business Cycles (pg. 88)
4.5 Japan’s Business Cycles (pg. 93)
4.6 Demand Shortage or Structural Problems? (pg. 103)
4.7 Summary (pg. 105)
Appendix 4.A: A Simple Keynesian Macroeconomic Model: Review (pg. 105)
Appendix 4.B: Theories of Business Cycles (pg. 107)
References (pg. 109)
Ch 5 - Financial Markets and Supervision (pg. 111)
5.1 Introduction (pg. 111)
5.2 The Japanese Financial System in the Rapid Economic Growth Period (pg. 113)
5.3 The Main Bank System (pg. 115)
5.4 Financial Deregulation (Mid-1970s to Late 1980s) (pg. 118)
5.5 Nonperforming Loans and the Banking Crisis (1990s) (pg. 123)
5.6 Takenaka Reform 2002–2003 (pg. 136)
5.7 A New Financial System in Japan (pg. 138)
5.8 The Future (pg. 146)
References (pg. 147)
Ch 6 - Monetary Policy (pg. 149)
6.1 Introduction (pg. 149)
6.2 Monetary Policy 1950—1971 (pg. 157)
6.3 The Great Inflation of the Early 1970s (pg. 159)
6.4 Great Moderation in Japan: 1975–1985 (pg. 165)
6.5 The Bubble and Its Burst: 1985–1998 (pg. 166)
6.6 The New Bank of Japan Act of 1998 (pg. 168)
6.7 The Challenge of Deflation, 1998–2012 (pg. 169)
6.8 Inflation-Targeting Debate (pg. 183)
6.9 Abenomics: The First Arrow (pg. 185)
6.10 Summary (pg. 186)
Appendix 6.A: Guide to Data (pg. 188)
Appendix 6.B: Downward Bias of the CPI (pg. 190)
References (pg. 191)
CH 7 - Public Finance (pg. 195)
7.1 Introduction (pg. 195)
7.2 Basic Facts (pg. 196)
7.3 The Tax Structure (pg. 205)
7.4 Government Spending (pg. 216)
7.5 The Rise and Fall of the Government Deficit, 1975–1990 (pg. 219)
7.6 Return of the Budget Deficit (pg. 221)
7.7 Sustainability of Government Debt (pg. 223)
7.8 Fiscal Policy as a Tool for Macroeconomic Stabilization (pg. 227)
7.9 Ricardian Neutrality and Non-Keynesian Effects (pg. 238)
7.10 The FILP and Postal Savings (pg. 241)
7.11 Local Public Finance and Decentralization (pg. 246)
7.12 Debate over Consumption Tax (pg. 248)
7.13 Summary (pg. 250)
Appendix 7.A Guide to Data (pg. 250)
Appendix 7.B Sustainability Calculation (pg. 251)
References (pg. 252)
Ch 8 - Saving, Demography, and Social Security (pg. 255)
8.1 Introduction (pg. 255)
8.2 Japan’s Saving Rate (pg. 257)
8.3 Life-Cycle Model of Saving and Consumption (pg. 259)
8.4 Japanese Demographic Transition (pg. 263)
8.5 Why Was the Japanese Saving Rate So High? (pg. 268)
8.6 International Comparison of Demographic Changes (pg. 271)
8.7 The Pension System of Japan (pg. 274)
Appendix 8.A: Guide to Data (pg. 278)
Appendix 8.B: The Saving-Investment Identity (pg. 280)
Appendix 8.C: The Overlapping Generations Model (pg. 281)
References (pg. 290)
Ch 9 - Industrial Structure (pg. 291)
9.1 Introduction (pg. 291)
9.2 From Zaibatsu to Keitretsu: The Postwar Transformation (pg. 292)
9.3 Enterprise Groups: From the 1950s to the 1980s (pg. 294)
9.4 Economic Consequences of Horizontal Keitretsu (pg. 310)
9.5 Vertical Keitretsu (pg. 312)
9.6 Bank Consolidation and Transformation of Horizontal Keitretsu in the 1990s (pg. 314)
9.7 Industrial Policy (pg. 316)
9.8 How Effective Has Japan’s Industrial Policy Been? (pg. 323)
9.9 Evolution of the Anti-Monopoly Act and Competition Policy (pg. 328)
Appendix 9A: Guide to Data (pg. 331)
References (pg. 332)
Ch 10 - The Labor Market (pg. 335)
10.1 Introduction (pg. 335)
10.2 Basic Statistics (pg. 336)
10.3 Traditional, Stylized Facts of the Japanese Labor Market (pg. 343)
10.4 Changing Labor Practices (pg. 370)
10.5 Youth Unemployment (pg. 373)
10.6 Working Hours of Japanese Workers (pg. 374)
10.7 Womenomics (pg. 375)
10.8 Summary (pg. 379)
Appendix 10.A: Concepts and Theories of Unemployment (pg. 380)
Theories of the Labor Market (pg. 381)
Appendix 10.B: Guide to Data (pg. 385)
References (pg. 386)
Ch 11 - International Trade (pg. 389)
11.1 Introduction (pg. 389)
11.2 Balance of Payments—Definition (pg. 391)
11.3 Balance of Payments—The Basic Facts (pg. 393)
11.4 Comparative Advantage and Pattern of Trade (pg. 396)
11.5 Trade Politics (pg. 403)
11.6 Monopolistic Competition and Intra-Industry Trade (pg. 404)
11.7 Gravity Equation (pg. 406)
11.8 Fragmentation (pg. 409)
11.9 WTO and FTA (pg. 411)
11.10 Summary (pg. 414)
Appendix 10.A: Gains from Trade (pg. 416)
References (pg. 422)
Ch 12 - International Finance (pg. 425)
12.1 Introduction (pg. 425)
12.2 Exchange Rates (pg. 432)
12.3 Capital Flows and Capital Controls (pg. 442)
12.4 Intervention (pg. 459)
12.5 Exchange Rate and Macro Fundamentals (pg. 463)
12.6 Internationalization of the Yen (pg. 475)
12.7 Concluding Remarks (pg. 486)
References (pg. 486)
Ch 13 - US-Japan Economic Conflicts (pg. 489)
13.1 Introduction (pg. 489)
13.2 US-Japan Trade Conflicts before the 1980s (pg. 490)
13.3 Emergence of Comprehensive Trade Talks: 1980s (pg. 491)
13.4 Managed Trade Demand and Refusal in the 1990s (pg. 505)
13.5 The End of Japan Bashing (pg. 515)
13.6 The TPP, the Trump Administration, and Back to Bilateral Negotiations (pg. 517)
13.7 Concluding Remarks (pg. 518)
References (pg. 518)
Ch 14 - The Lost Two Decades (pg. 521)
14.1 Four Phases (pg. 521)
14.2 The Bubble (pg. 525)
14.3 Phase One (pg. 528)
14.4 Phase Two (pg. 535)
14.5 Phase Three (pg. 541)
14.6 Phase Four (pg. 543)
14.7 Abenomics and the End of the Lost Two Decades (pg. 562)
References (pg. 563)

Takeo Hoshi

Takeo Hoshi is Professor of Economics in the Graduate School of International Relations and Pacific Studies at the University of California, San Diego.

Takatoshi Ito

Takatoshi Ito is Professor of Economics at the Graduate School of Economics, University of Tokyo.

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