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Japan's Lessons for America's Budget Warriors
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Japan's Lessons for America's Budget Warriors

John H. Makin
AEI, 2013
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Editorial Rating

7

Qualities

  • Comprehensive
  • Eye Opening
  • Well Structured

Recommendation

The US’s sluggish recovery from the 2008 financial crisis mirrors in many ways Japan’s post-1990 economy. However, their experiences are not identical. Thus, America’s ailment requires a different prescription. Economic consultant John H. Makin offers a cogent explanation to why the US shouldn’t swallow the same medicine as Japan. His text is highly detailed, but it provides a thought-provoking comparison with Japan and sheds light on many aspects of fiscal crises. getAbstract recommends this article to US policy makers seeking a model to emulate and to observers of the global economic recovery.

Take-Aways

  • America’s faltering economy shares many similarities with that of post-1990 Japan: Both suffer rising public debt and deficits and falling interest rates.
  • However, Japan’s crisis led to a prolonged period of stagnation and deflation, neither of which have manifested in the US.
  • To tackle its problems, Japan is deploying two strategies: unleashing a $150 billion stimulus program and printing money to create inflation of 2%.

About the Author

John H. Makin is a former consultant to the US Treasury Department, the Congressional Budget Office and the International Monetary Fund.

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