Book Review: Takeo Hoshi & Anil K. Kashyap: "Why Did Japan Stop Growing–Policy Options for Japan’s Revival" (in Japanese)

WhyDidJapanStopGrowingBookCover_300Dr. Takeo Hoshi, Professor of Stanford University and a member of the San Francisco Akamon-kai, and Prof. Anil K. Kashyap of the University of Chicago published their latest book (written in Japanese): “Why Did Japan Stop Growing—Policy Options for Japan’s Revival” (Nihon Keizai Shinbun Co. Press, 207 pages, ISBN978-4-532-35547-0) in January 2013. This book is based on their two reports (in English) published as NIRA (National Institute for Research Advancement, Japan) Reports: “Why Did Japan Stop Growing?” (January 2011) and “Policy Options for Japan’s Revival” (June 2012).
The authors state in the preface: “The present stagnation of Japan’s economy is not a simple economic downturn, and what is required is not an ordinary policy for economic stimulation. The reason why Japan’s economy has been stagnant is neither a consequence of the Great Earthquake disaster, nor a ripple effect of the global financial crisis. The Koizumi government is not to blame for the instability of Japan’s economy. Even the collapse of the bubble is not the fundamental cause of the stagnation of Japan’s economy.”
In the September 12, 2008 issue of the Wall Street Journal, just before the bankruptcy of Lehman Brothers, the authors published an article entitled “A Blueprint for Reforming Japan.” In that article the authors proposed five policies that the Japanese Government and the Bank of Japan should implement. First, drop the policy to protect businesses that have lost competitiveness, which the authors refer to as “zombie firms”; second, reduce agricultural subsidies; third, introduce a tax identification number system; fourth, reform the immigration policy; and fifth, expand the monetary policy to end deflation. Most of these proposals are carried over to this book.
This book explores the causes of the slowdown of Japan’s economy from the long term perspective, and proposes policies that are required to make Japan’s economy to revive and grow again.
Included at the end of the book is a nine page commentary “What have we learned from the lost two decades?” by Motoshige Ito, Professor of Economics, the University of Tokyo, and President of NIRA. He praises the authors’ “high quality analysis” of policy issues and endorses the authors’ conviction as well as their specific prescriptions to regain the health of Japan’s economy. The real challenge the country faces, however, is the difficulty in implementing these policies, says Ito. Regrettably, the Japanese economists have not fulfilled so far their important duty as scholars to enlighten and persuade the general public, politicians and bureaucrats. Prof. Ito criticizes Japan’s scholars (and perhaps including himself) for their insufficient effort.

Table of Contents


  1. Part I Why Did Japan Stop Growing?
  2. Part 2: Successes and Failures of Economic Policies—Examination of the Koizumi Cabinet
  3. Part 3: Policy Options for Japan’s Revival

Commentary: “What Have We Learned from the Lost Two Decades?” -Motoshige Ito

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