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Lost Decade in Translation: Did the US Learn from Japan's Post-Bubble Mistakes?

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  • James Harrigan
  • Kenneth Kuttner

Abstract

In 1991, the Japanese economy ended a historic expansion and entered a period of stagnation that has yet to abate. Nine years later, the US economy ended a similarly historic expansion. There were many similarities in the two countries' expansions: asset price bubbles, a real investment boom, easy monetary policy, and improvements in government finances. In the wake of bursting bubbles, the Japanese banking system was insolvent and monetary policy was too tight, problems not evident in the US post-bubble period. But the US has worse fiscal and current account imbalances than Japan had at the same stage in the post-bubble era.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10938.

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Date of creation: Nov 2004
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Publication status: published as Patrick, Hugh, Takatoshi Ito and David Weinstein (eds.) Reviving Japan’s Economy: Problems and Prescriptions. Cambridge, MA: MIT Press, 2005.
Handle: RePEc:nbr:nberwo:10938

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Cited by:
  1. Cornell, Christopher M. & Solomon, Raphael H., 2007. "Are currency crises low-state equilibria?: An empirical, three-interest-rate model," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 489-504.

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