Industry and Business in Japan (Routledge Library Editions: Japan)

Routledge Library Editions: Business and Economics in Asia
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Access to an improved water source is universal in Japan. Japan is the second most populous island country with a population of About 80 million of the urban population is heavily concentrated on the Pacific coast of Honshu. The capital city Tokyo has a population of Japanese society is linguistically , ethnically and culturally homogeneous, [] [] composed of The most dominant native ethnic group is the Yamato people ; primary minority groups include the indigenous Ainu [] and Ryukyuan people , as well as social minority groups like the burakumin.

Japan has the second longest overall life expectancy at birth of any country in the world: In , about On September 15, , for the first time, 1 in 5 persons in Japan is 70 or older according to the Ministry of Internal Affairs and Communications. Elderly women crossed the 20 million line at In , the number of resident foreigners was 2.

In , net immigration rose for the sixth straight year with , The number of foreign workers was 1. The revision clarifies and better protects the rights of foreign workers. This helps reduce labor shortage in certain sectors of the economy. The reform changes the status of foreign workers to regular employees. Japan has full religious freedom based on Article 20 of its Constitution.

Routledge Library Editions: Japan

The number of Shinto shrines in Japan is estimated to be around , Other studies have suggested that only 30 percent of the population identify themselves as belonging to a religion. Nevertheless, the level of participation remains high, especially during festivals and occasions such as the first shrine visit of the New Year. Taoism and Confucianism from China have also influenced Japanese beliefs and customs. This is due to the fact that "Shinto" has different meanings in Japan: most of the Japanese attend Shinto shrines and beseech kami without belonging to Shinto organisations, and since there are no formal rituals to become a member of folk Shinto, Shinto membership is often estimated counting those who join organised Shinto sects.

Shinto has , shrines and 78, priests in the country. Christianity was first introduced into Japan by Jesuit missions starting in Nagasaki Prefecture has the highest percentage of Christians: about 5. More than 99 percent of the population speaks Japanese as their first language. Japanese writing uses kanji Chinese characters and two sets of kana syllabaries based on cursive script and radical of kanji , as well as the Latin alphabet and Arabic numerals.

Few children learn these languages, [] but in recent years the local governments have sought to increase awareness of the traditional languages. The Okinawan Japanese dialect is also spoken in the region. The Ainu language , which has no proven relationship to Japanese or any other language, is moribund , with only a few elderly native speakers remaining in Hokkaido. The changes in demographic structure have created a number of social issues, particularly a potential decline in workforce population and increase in the cost of social security benefits such as the public pension plan.

This was the greatest decline since at least , when comparable figures were first compiled. Japan's population is expected to drop to 95 million by ; [] [] demographers and government planners are currently in a major debate over how to cope with this problem. Japan suffers from a high suicide rate.

Primary schools, secondary schools and universities were introduced in as a result of the Meiji Restoration. Almost all children continue their education at a three-year senior high school. The two top-ranking universities in Japan are the University of Tokyo and Kyoto University , [] which have produced 16 Nobel Prize laureates. Japan's education system played a central part in the country's recovery and rapid economic growth in the decades following the end of World War II. The latter law defined the school system that would be in effect for many decades: six years of elementary school , three years of junior high school , three years of high school, and two or four years of university.

Starting in April , various schools began the academic year with elementary school and junior high school integrated into one nine-year compulsory schooling program, in hopes to mitigate bullying and truancy ; MEXT plans for this approach to be adopted nationwide in the coming years. The Programme for International Student Assessment coordinated by the OECD currently ranks the overall knowledge and skills of Japanese year-olds as the third best in the world. The country's large pool of highly educated and skilled individuals is largely responsible for ushering Japan's post-war economic growth.

Although expenditure per student is comparatively high in Japan, total expenditure relative to GDP remains small. In Japan, health care is provided by national and local governments. Payment for personal medical services is offered through a universal health insurance system that provides relative equality of access, with fees set by a government committee. People without insurance through employers can participate in a national health insurance program administered by local governments.

Since , all elderly persons have been covered by government-sponsored insurance. Japanese culture has evolved greatly from its origins. Contemporary culture combines influences from Asia, Europe and North America. Japan has a developed system for the protection and promotion of both tangible and intangible Cultural Properties and National Treasures. The code of etiquette in Japan governs the expectations of social behavior. They are considered very important in Japan.

The etiquette varies greatly depending on one's status relative to the person in question. Some customs have changed over time. These distinct cultural values make Japanese etiquette substantially different from western and other countries. It originates from the Heian period and describes the indigenous Japanese 'spirit' or cultural values as opposed to cultural values of foreign nations.

It is a meeting opportunity with more serious considerations for the future as a process of courtship. Cherry blossoms are a symbol of isagiyosa in the sense of embracing the transience of the world. Japan is regarded by sociologists as a high-context culture. People are more observant of hierarchical differences and communicate less explicitly and verbosely. Face-saving to avoid being disgraced or humiliated is generally considered as more important in Japan's high context culture than in low-context ones such as the United States or Germany.

There are differences in advertising and marketing in Japan due to the high-context culture. In Japan advertising uses more colors, images, gestures and sounds with powerful meaning behind them. Dialogue is not a central part of the advertising. Every vocal and non-vocal expression is explored, because Japanese people are more sensitive to it.

Comparatively in low-context cultures advertising is more straightforward. Japanese architecture is a combination between local and other influences. It has traditionally been typified by wooden structures, elevated slightly off the ground, with tiled or thatched roofs. Sliding doors fusuma were used in place of walls, allowing the internal configuration of a space to be customized for different occasions.

People usually sat on cushions or otherwise on the floor, traditionally; chairs and high tables were not widely used until the 20th century. Since the 19th century, however, Japan has incorporated much of Western, modern , and post-modern architecture into construction and design, and is today a leader in cutting-edge architectural design and technology. The introduction of Buddhism during the sixth century was a catalyst for large-scale temple building using complicated techniques in wood.

Influence from the Chinese Tang and Sui dynasties led to the foundation of the first permanent capital in Nara. Its checkerboard street layout used the Chinese capital of Chang'an as a template for its design. A gradual increase in the size of buildings led to standard units of measurement as well as refinements in layout and garden design. The introduction of the tea ceremony emphasised simplicity and modest design as a counterpoint to the excesses of the aristocracy.

During the Meiji Restoration of the history of Japanese architecture was radically changed by two important events. The first was the Kami and Buddhas Separation Act of , which formally separated Buddhism from Shinto and Buddhist temples from Shinto shrines , breaking an association between the two which had lasted well over a thousand years. Second, it was then that Japan underwent a period of intense Westernization in order to compete with other developed countries. Initially architects and styles from abroad were imported to Japan but gradually the country taught its own architects and began to express its own style.

Architects returning from study with western architects introduced the International Style of modernism into Japan. Japanese philosophy has historically been a fusion of both foreign, particularly Chinese and Western , and uniquely Japanese elements. In its literary forms, Japanese philosophy began about fourteen centuries ago.

Indigenous ideas of loyalty and honor have been held since the 16th century. Western philosophy has had its major impact in Japan only since the middle of the 19th century. The Shrines of Ise have been celebrated as the prototype of Japanese architecture. The history of Japanese painting exhibits synthesis and competition between native Japanese aesthetics and adaptation of imported ideas. The interaction between Japanese and European art has been significant: for example ukiyo-e prints, which began to be exported in the 19th century in the movement known as Japonism , had a significant influence on the development of modern art in the West, most notably on post-Impressionism.

Japanese manga developed in the 20th century and have become popular worldwide. Japan has one of the oldest and largest film industries in the world; movies have been produced in Japan since Japanese music is eclectic and diverse. Many instruments , such as the koto , were introduced in the 9th and 10th centuries. The accompanied recitative of the Noh drama dates from the 14th century and the popular folk music , with the guitar-like shamisen , from the sixteenth.

The imperial court ensemble Gagaku has influenced the work of some modern Western composers. Popular music in post-war Japan has been heavily influenced by American and European trends, which has led to the evolution of J-pop , or Japanese popular music. A survey by the Cultural Affairs Agency found that more Japanese had sung karaoke that year than had participated in traditional pursuits such as flower arranging ikebana or tea ceremonies.

The Tale of the Bamboo Cutter is considered the oldest Japanese narrative. Japanese comics or graphic novels, known as manga , developed in the 20th century and have become popular worldwide. Anime are influenced by manga, and are often adapted from them. Japanese animated films and television series, known as anime , were largely influenced by Japanese manga and have been extensively popular in the West. Japan is a world-renowned powerhouse of animation. Japanese cuisine is known for its emphasis on seasonality of food , [] quality of ingredients and presentation.

Japanese cuisine offers a vast array of regional specialties that use traditional recipes and local ingredients. The term is also used to describe the first course served in standard kaiseki cuisine nowadays. Traditional Japanese sweets are known as wagashi.

More modern-day tastes includes green tea ice cream , a very popular flavor. It is usually sold and eaten at summer festivals. Officially, Japan has 16 national, government-recognized holidays. These changes took effect in It is intended to coincide with the Bon Festival vacation time, giving Japanese people an opportunity to appreciate Japan's mountains.

There are no specific festival days for all of Japan; dates vary from area to area, and even within a specific area, but festival days do tend to cluster around traditional holidays such as Setsubun or Obon. Festivals are often based around one event , with food stalls, entertainment, and carnival games to keep people entertained. Its usually sponsored by a local shrine or temple , though they can be secular. Notable festivals often feature processions which may include elaborate floats. Prior to these, the local kami may be ritually installed in mikoshi and paraded through the streets, such as Gion in Kyoto , and Hadaka in Okayama.

Traditionally, sumo is considered Japan's national sport. After the Meiji Restoration, many Western sports were introduced in Japan and began to spread through the education system. Baseball is currently the most popular spectator sport in the country.

Japan's top professional league, now known as Nippon Professional Baseball , was established in [] and is widely considered to be the highest level of professional baseball in the world outside of the North American Major Leagues. Since the establishment of the Japan Professional Football League in , association football has also gained a wide following. Video gaming in Japan is a major industry.

Japan became a major exporter of video games during the golden age of arcade video games , an era that began with the release of Taito's Space Invaders in and ended around the mids. Japan's dominance within the industry would continue for the next two decades, until Microsoft 's Xbox consoles began challenging Sony and Nintendo in the s. In the Japanese gaming industry, arcades have remained popular through to the present day. In the present day, Japan is the world's largest market for mobile games.

Television and newspapers take an important role in Japanese mass media, though radio and magazines also take a part. Variety shows , serial dramas , and news constitute a large percentage of Japanese television shows. According to the NHK survey on television viewing in Japan, 79 percent of Japanese watch television every day. The average daily duration of television viewing was three hours.

Japanese readers have a choice of approximately daily newspapers with a total of 50 million copies of set paper with an average subscription rate of 1. According to a survey conducted by the Japanese Newspaper Association in June , Average daily reading times vary with From Wikipedia, the free encyclopedia. For other uses, please see Nippon disambiguation or Japan disambiguation. Island country in East Asia. Japan [1]. Imperial Seal. Government Seal of Japan. Japanese territory in dark green; claimed, but uncontrolled land shown in light green. Website www. Main article: Names of Japan.

Main article: History of Japan. Main articles: Geography of Japan and Geology of Japan. Cherry blossoms of Mount Yoshino have been the subject of many plays and waka poetry. Main article: Wildlife of Japan. Main article: Environmental issues in Japan. Main article: Politics of Japan. Main article: Government of Japan. Naruhito Emperor since Main article: Administrative divisions of Japan. See also: Prefectures of Japan. Main article: Foreign relations of Japan. Main article: Japan Self-Defense Forces.

Main article: Law enforcement in Japan.

Main article: Economy of Japan. Main article: Economic history of Japan. Main article: Agriculture, forestry, and fishing in Japan. Main article: Manufacturing in Japan. Main article: Trade and services in Japan. Main article: Tourism in Japan. Mount Fuji , the highest peak, is considered as one of the most iconic landmarks of Japan.

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Fushimi Inari-taisha in Kyoto. Main article: Science and technology in Japan. Main articles: Electronics industry in Japan and Automotive industry in Japan. Main article: Transport in Japan. Main article: Energy in Japan. Main article: Water supply and sanitation in Japan. Largest cities or towns in Japan Census. Main article: Religion in Japan. Main articles: Languages of Japan and Japanese language. Main article: Education in Japan.

Main articles: Health in Japan and Health care system in Japan. Main article: Culture of Japan. See also: Japanese popular culture. Main article: Etiquette in Japan. Main article: Japanese architecture. Main article: Japanese philosophy. Main article: Japanese art. Further information: Japanese garden and Japanese aesthetics. See also: Manga. Ritsurin Garden , one of the most famous strolling gardens in Japan. Hirado ware porcelain censers in the form of tiger and figurine with fan, brown and blue glazes. Main article: Cinema of Japan.

Main article: Music of Japan. Main articles: Japanese literature and Japanese poetry. Main articles: Manga and Anime. Main article: Japanese cuisine. Main article: Public holidays in Japan. Main article: Japanese festivals. Main article: Sport in Japan. Main article: Video gaming in Japan. Main article: Media of Japan. Japan portal Islands portal Asia portal. Retrieved November 23, Retrieved January 29, Archived from the original on February 2, The Edo Period lasted for nearly years until the Meiji Restoration in , when the Tokugawa Shogunate ended and imperial rule was restored.

The Emperor moved to Edo, which was renamed Tokyo. Retrieved August 27, Geospatial Information Authority of Japan. Archived from the original on September 19, Retrieved September 19, Statistics Bureau Japan. June 20, Archived from the original on June 6, Retrieved July 18, May The World Factbook. Archived from the original on June 30, United Nations Development Programme. Retrieved March 23, Ministry of Land, Infrastructure, Transport and Tourism. August 22, Archived from the original website on July 13, Retrieved August 9, Archived from the original on October 2, Retrieved October 22, United Nations.

Retrieved July 1, Paul; James J. Wirtz; Michel Fortmann US: Palgrave Macmillan. Archived from the original on March 28, Retrieved April 27, The End of Globalization or a more Multipolar World? Credit Suisse AG. Archived from the original on February 15, Retrieved July 14, World Health Organization. June 1, Retrieved June 1, United Nations World Population Prospects, revision.

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Retrieved January 15, The emergence of Japanese kingship. Stanford University Press. How Japan became Japan? January 6, Japan Foundation. The Japan Times Online. The Japan Times. Archived from the original on August 25, Retrieved August 25, The Christian century in Japan — University of California Press. Houghton Mifflin Harcourt. October 13, Travel narratives from the age of discovery: an anthology. Oxford University Press.

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Industry and Business in Japan (Routledge Library Editions: Japan) - Kindle edition by Kazuo Sato. Download it once and read it on your Kindle device, PC. Routledge Library Editions: Japan brings together a century's worth of publishing and The Origins of National Diversity in Industrial Relations, 1st Edition.

University of Chicago Press. Japan Encyclopedia. April 27, Japanese Archaeology. Retrieved July 28, On Understanding Japanese Religion. Princeton University Press. At any rate, the first ten legendary emperors are clearly not reliable historical records. Notes and Remarks on the Jimmu Tenno Myth". Monumenta Nipponica. University of Pittsburgh.

Anthropological Science. Journal of Human Genetics. Multicultural Japan: palaeolithic to postmodern. Cambridge University Press. National Science Museum of Japan. Archived from the original on April 30, Metropolitan Museum of Art. Cambridge: Cambridge University Press. The Cambridge History of Japan. A History of Japan: — A History of Japan. Epidemics and pandemics: their impacts on human history. Palgrave Macmillan.

An Introduction to the History of Japan. BiblioBazaar, LLC. A History of Japan 2nd ed. January 29, Toyotomi Hideyoshi. Osprey Publishing. Journal of Japanese Studies. Japanese Economy. Japan's Emergence as a Modern State. New York: Inst. Pacific Relations. Tak In Tsutsui, William M. Companion to Japanese History.

Baran, Paul The Political Economy of Growth. New York: Monthly Review Press. Japan and Singapore in the world economy: Japan's economic advance into Singapore, — November International Security. Harvard University Press.

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Retrieved April 3, BBC News. July 14, Retrieved December 28, The New York Times. Retrieved March 11, Nikkei Asian Review. Retrieved April 30, Ministry of Health, Labour and Welfare. By Johannes Hirschmeier , Tsunehiko Yui. The study, first published in , traces the history and development of Japanese business from the seventeenth century, and is the only text that systematically treats the rise of Japanese business in its full complexity and against the background of contemporary social and political conditions.

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Data are derived from a 10, household subsample of the annual rural household consumption and expenditure survey. By Ann Rasmussen Kinney. This book, first published in , closely examines the Japanese investment in the industries of its puppet state Manchuria in the years to Attention is paid to industrial capital by source and type, facilitating the analysis of the relationship between the different investment….

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Edited by Chris Rowley , Mark Lewis. Routledge Library Editions: Business and Economics in Asia This set examines a vast range of topics covering all experiences of business and economics from across Asia. Routledge Library Editions: Business and Economics in Asia 1st Edition By Various This set examines a vast range of topics covering all experiences of business and economics from across Asia.

Dealing with early banking systems in China; the industrialisation of Korea and Taiwan; the evolution of Japanese business practices; economic development; protectionist policies;… Hardback — Routledge Routledge Library Editions: Business and Economics in Asia. Freris The financial markets of Hong Kong have a reputation for volatility, but careful analysis of past behaviour reveals consistent trends and coherent actions.

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This Book have some digital formats such us :paperbook, ebook, kindle, epub, fb2 and another formats. Contents: Professor David Smallbone Routledge Library Editions: Business and Economics in Asia - Routledge 41 Series Titles Recommended For You It covers The Green Revolution — the apparently miraculous increase in cereal crop yields achieved in the s — came under severe criticism in the s because of its demands for optimal irrigation, intensive use of fertilisers and pesticides; its damaging impact on social structures; and its monoculture First published in , this reissue considers the main aspects of foreign aid to developing countries in terms of economic concepts and principles.

Professor David Smallbone The Economic and Social Structure of Mauritius 1st Edition James E Meade April 12, First published in , this reissue examines the contemporary economic problems of Mauritius alongside those social problems which have a bearing on economic development. In Keynesian macroeconomic theory, business cycle fluctuations are caused by aggregate demand collapsing.

Consumption is regarded as relatively stable, so the weakening in aggregate demand is due to the declining investment. Keynes did not precisely explain why investment collapsed; instead he attributed it to "animal spirits" in the business community. If the s asset bubble is ignored, and Japan's stock market is viewed between and , a massive withdrawal of confidence occurred in the business community and investment collapsed, causing the Nikkei index to fall more than 60 percent.

Because the investment decline is not attributed to something specific in Keynesian theory, the theory is difficult to refute. Nevertheless, in Japan, there has been a recession that has not corrected itself following a drop in investment. In Keynesian theory, prices are "sticky" or rigid in the downward direction, so they do not adjust quickly to restore equilibrium.

Although the economy might eventually restore its equilibrium, equilibrium is not inevitable. Even if price adjustments eventually restore equilibrium, Keynesians believe that the process requires too much time. According to Keynesians, to recover from recession, government must pursue active fiscal policies by lowering taxes and raising spending to increase aggregate demand and offset the fall in investment.

Keynesians usually prefer increased government spending. Many of the policies in Japan fit the Keynesian prescription, but they have failed to bring the economy out of recession.

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Between and , Japan tried six spending programs totaling In January , Japan temporarily cut taxes again by 2 trillion yen. Then, in April of that year, the government unveiled a fiscal stimulus package worth more than Again, in November , another fiscal stimulus package worth A year later November , yet another fiscal stimulus package of 18 trillion yen was tried. Finally, in October , Japan announced yet another fiscal stimulus package of 11 trillion yen.

Overall during the s, Japan tried 10 fiscal stimulus packages totaling more than trillion yen, and each failed to cure the recession. What the spending programs have done, however, is put Japan's government in poor fiscal shape. The "on-budget" government spending has caused public debt to exceed percent of GDP highest in the G7 , and even more debt is apparent when the "off-budget" sector is included.

The Keynesian framework permits a liquidity trap in which shifting the LM curve has no effect on aggregate demand. Keynesians can point to failed attempts by the Bank of Japan to reinflate in order to revive its economy see monetarist section below as evidence supporting their theory. The Keynesian policy solution when the economy is in a liquidity trap is to have the government lend directly to businesses instead of creating liquidity in the banking system. Japan has the Fiscal Investment and Loan Programme FILP , an off-budget branch of the Japanese government worth about 70 percent of the spending in the general-account budget.

FILP gets most of its money from the post office savings accounts. Once they collect the money, the funds are allocated to borrowers through the Ministry of Finance Trust Fund Bureau and the bureau's various agencies. Much of this money is not allocated to the most efficient projects. The Economist Intelligence Unit profile states that "FILP money is channeled toward traditional supporters of the LDP, such as those in the construction industry, and without proper consideration of the costs and benefits of specific projects" EIU , p. Although this Keynesian approach of government direct-lending does avoid the reluctance of banks to lend, it does not aid economy recovery.

Funds are not allocated according to market-based consumer preferences, but to the most politically connected businessmen. This leads to a higher cost of borrowing for those seeking private funds, further distorting the economy. Also, because the loans are often highly risky, Japan's fiscal condition deteriorates further. Krugman argues that this is not a problem as long as Japan is not producing at capacity. He says that to assert otherwise is erroneous because the focus on supply ignores the real problem: inadequate demand.

Japan's problem, however, is not inadequate aggregate demand but a structure of production that does not meet consumers' particular demands. Producing things that nobody wants and propping up malinvestments cannot possibly help any economy. This policy is equivalent to the old Keynesian depression nostrum of paying people to dig holes and fill them. Neither policy will revive the economy because neither forces businesses to realign their structures of production to match consumer demands.

Krugman offers another policy solution. Because New Keynesians do not strictly prefer fiscal policy over monetary policy, Krugman recommends "unconventional monetary expansion, with the Bank of Japan buying dollars, euros, and long-term government bonds; it also involves accepting and indeed promoting mild inflation and a weak yen. I could explain why this would probably work, but what's the point? It's not about to happen" Krugman Krugman should not think that this could not happen, because it is similar to what occurred from mid to mid, and this approach did not work. The Japanese economy was not stimulated out of its recession but instead experienced the two most negative years of GDP growth in the decade.

Krugman's policy recommendations are a result of his belief that Japan is in a liquidity trap. Although Krugman recognizes the problems in Japan's banking system and thinks that the banks need to be reformed, he believes the failure of broad monetary aggregates to expand along with narrow aggregates is not due to the banking problems but is occurring because Japan is in a liquidity trap.

Although he recognizes that current inflation is ineffective in a liquidity trap, he thinks the major obstacle is a credibility problem. If the central bank could credibly promise to continue to inflate in the future, Japan would be able to increase the aggregate demand and revive its economy. He recommends passing a law requiring the central bank to pursue at least 4 percent inflation rates for 15 years Krugman Central banks, however, do not have a credibility problem when promising to inflate.

The history of central banks is one of continual inflation of the money supply and erosion of their currency's purchasing power. Indeed, given the history and incentives of central banks, the Japanese people should already rationally expect Japan to continue to inflate its money supply in the future, regardless of policy announcements. Krugman's policy recommendations would only make Japan's problems worse. Any fiscal stimulus package only serves to maintain the existing structure of production against the preferences of consumers.

Even worse, a policy of continual inflation only distorts the interest-rate signal from consumers to businesses and results in more malinvestments that will eventually have to be liquidated see section on Austrian theory below. While Keynesian theorists could plausibly point to evidence that the source of Japan's recession is consistent with their theory, many Keynesian policies have failed to revive Japan's economy.

Massive spending and lending packages have been tried over the past decade. By focusing on aggregate demand, Keynesian theory overlooks Japan's real problem: a mismatch between the existing structure of production and consumers' specific demands. The Keynesian spending programs have not only failed to pull Japan out of its recession, but they have also placed the government in a weak fiscal position and distorted the economy further away from consumer preferences. The Monetarist School, like the Keynesian, has no trouble finding a cause for Japan's recession.

Monetarists blame recessions on a contraction in the money supply or a slowdown in the growth rate. In the discount rate was lowered to 2. An asset price bubble followed. To stop the bubble, the discount rate was raised five times, to 6 percent during and , slowing lending, and the bubble burst. Since the monetary contraction, Japan's economy has been in a recession. Monetarists can argue that the BOJ contracted the monetary expansion too quickly and caused the economic slowdown, much like Milton Friedman's story in the Great Contraction regarding America's Great Depression.

Traditionally, monetarists have recommended reinflating after a monetary collapse to avoid a continuing depression. Monetarists recommend this because they have traditionally viewed the LM curve as relatively steeply sloped and the IS curve as flatter. This branch of monetarism has seen its policies implemented and fail in Japan.

Japan's expansionary monetary policy failed to achieve recovery. From a high of 6 percent, the discount rate has been lowered to 4. This dramatic easing of interest rates has not stimulated Japan's economy, but the failure of interest-rate easing is not necessarily a failure of monetary theory. Japan's banking system is widely regarded as in need of restructuring. Much of the stimulus that reduced rates could provide has not been realized because the banking community has been increasing its liquidity instead of increasing its lending.

Many banks have bad loans with collateral now worth only 60—80 percent of their value when the loans were made. Some banks are merging, and others have been nationalized. Such problems have contributed to the ineffectiveness of monetary policy. Some monetarists argue that interest rates should be ignored and that the money supply itself must be controlled. Milton Friedman has advocated a monetary rule of expanding the money supply at an annual rate of 3—4 percent.

During the s, the Japanese money supply grew steadily. M2 grew from , billion yen in to , billion yen in , an increase of about 25 percent over the decade, or 2. Monetarists who advocate a monetary rule would likely point out that Japan should have been following a monetary rule before the recession.