Reflections on Japanese Political Economy

Abstract

I have come to these sessions for several years and always enjoyed them. I probably always say the same things; I hope people don’t remember. One of the same things I say is that Japanese macroeconomic policy is perversely and inexcusably incompetent, and I surely would say that again. It’s true—as Paul Krugman, a fellow participant in this program, has been saying and as I have said here in previous years—that Japan has reinvented the Keynesian liquidity trap. It can now reappear in classrooms where it had been long ignored or at best barely mentioned as a curiosum of the Great Depression.