Charles Wyplosz, 30 April 2010

The current debate in the US over Chinese exchange-rate policy can be viewed as a rerun of the 1970s and ‘80s, with China taking Japan’s role. This column, which first appeared in the Vox's latest eBook, argues that while there is a relationship between current-account deficits and surpluses, causality is difficult to establish. Politics aside, even if China does not choose to appreciate its currency, inflation will eventually finish the job.

Ryuhei Wakasugi, 27 November 2009

Japanese exports were hit particularly hard by the crisis. This chapter shows how tumbling US import demand hurt Japanese exports both directly and via indirect exports of goods assembled in China for the US market (the so-called “trade triad”). An investigation into the extensive and intensive margins during Japan’s recent trade collapse shows that most adjustment occurred in existing trade relationships; there is very little evidence of deeper harm to Japan’s export capability via damage to its international supply chain. That means the ongoing recovery of the US economy should produce an especially speedy revival of Japanese exports.

Mariassunta Giannetti, Andrei Simonov, 23 September 2009

Is there any evidence that bank bailouts will improve the real economy? This column uses micro-level evidence from the Japanese banking crisis to assess bank recapitalisation efforts. It says that bailouts do increase lending, but banks continue to lend to low-quality borrowers, and borrowers may hold the cash on their balance sheets rather than investing or hiring.

Kiyoyasu Tanaka, 07 May 2009

Global trade is collapsing at an unprecedented rate, but not evenly across the globe. This column argues that ‘vertical specialisation’ – the internationalisation of manufacturing supply chains – accounts for the amplification of Japan’s drop in trade. The good news is that once OECD countries start to recover, the amplification should work in reverse, boosting Japanese exports and imports at an accelerating rate.

Sandra Poncet, 16 February 2009

This column says that less-productive Japanese firms are more sensitive to distance and institutional quality in their locational decisions abroad. Alternatively, the greater responsiveness of low-productivity firms to the presence of an export promotion agency or a Japanese community indicates that networks and spillovers may help to mitigate these impediments.

Keiichiro Kobayashi, 27 October 2008

Japan’s banking crisis of the late 1990s and early 2000s offer critical lessons on how to deal with the current financial crisis. This column warns against relying on fiscal stimulus, stresses the importance of recapitalising viable bank but letting the ‘zombie banks’ go bust to boost certainty about financial firms’ solvency. In order to avoid a vicious cycle of steady economic decline as in Japan, the G8 and emerging economies should create a "Financial System Stabilisation Fund".

Charles Wyplosz, 20 July 2008

Should taxpayers bail out the banking system? One of the world’s leading international macroeconomists contrasts the Larry Summers “don’t-scare-off-the-investors” pro-bailout view with the Willem Buiter “they-ran-into-a wall-with-eyes-wide-open” anti-bailout view. He concludes that either way, taxpayers are always the losers. The best policy makers can do is to be merciless with shareholders and gentle with bank customers.

Mitsuyo Ando, Fukunari Kimura, 04 December 2007

Offshoring is not new. Kūdōka (hollowing-out due to offshoring) has worried Japan since the 1980s. Evidence from Japan presented in a new CEPR Policy Insight suggests that offshoring may help create domestic jobs, especially for SMEs.

David Weinstein, Christian Broda, 22 October 2007

According to official statistics, Japan seems to have almost pulled out of its crippling deflation. The Japanese inflation statistics, however, are calculated using outdated methods that are well-known to overstate inflation. Recent research suggests that true Japanese deflation is probably 1 to 2 percentage points worse than suggested by official statistics.

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