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Download The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession eBook

by Richard C. Koo

Download The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession eBook
ISBN:
0470824948
Author:
Richard C. Koo
Category:
Business & Finance
Language:
English
Publisher:
Wiley; Revised edition (August 17, 2009)
Pages:
352 pages
EPUB book:
1618 kb
FB2 book:
1797 kb
DJVU:
1410 kb
Other formats
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Rating:
4.9
Votes:
652


Lessons from Japan's Great Recession.

Lessons from Japan's Great Recession. This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures.

Japan's Great recession of 1990-2005 finally gave us some vital clues as to how a post-bubble economy can plunge into . Richard Koo believes that the Japanese have done exactly the right thing in response to their asset bubble bursting in 1990.

Japan's Great recession of 1990-2005 finally gave us some vital clues as to how a post-bubble economy can plunge into prolonged recession while leaving conventional policy responses largely ineffective. Real Estate prices and stock prices crashed by 70%. The response of the Japanese government was to not let the country go into recession but to keep the GDP at zero growth or stagnation. They did this and have done this by 25 years of budget deficits that have raised the national debt from 60% GDP to nearly 250% GDP. Koo thinks this is great.

This book is about Japan's 15-year long recession and how it affected . Yin and Yang Economic Cycles and the Holy Grail of Macroeconomics 1 Bubbles balance sheet recessions and the economic cycle.

This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures. It has a detailed explanation on what happened to Japan, but the discoveries made are so far-reaching that a large portion of economics literature will have to be modified to accommodate another half to the macroeconomic spectrum of possibilities that conventional theorists have overlooked. The mistake of applying yang tools to a yin world. What Keynes and the monetarists both missed.

Koo believes that Japan's "great recession" of 1991-2005 contains useful lessons .

Koo believes that Japan's "great recession" of 1991-2005 contains useful lessons for interpreting and dealing with the subprime mortgage crisis in the United States and with the burst financial bubbles in China and Europe. The Holy Grail of Macro Economics: Lessons From Japan's Great Recession.

The Holy Grail of Macroeconomics - Lessons from Japan's Great Recession. The Holy Grail of Macroeconomics - Lessons from Japan's Great Recession.

This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and . Interested in learning more about the Japanese episode, I picked up "The Holy Grail of Macro-Economics", by Richard Ko. he book had much that I was looking for on Japan: about the conditions of their corporations, the levels of indebtedness, and the ways in which their government tried to deal with i. n addition, it turned out to be a more ambitious.

This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures

This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures. It has a detailed explanation on what happened to Japan, but the discoveries made are so far-reaching that a large portion of economics literature will have to be modified to accommodate another half to the macroeconomic spectrum of possibilities that conventional theorists have overlooked

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Richard C. Koo (Japanese: リチャード・クー, IPA: ; Chinese: 辜朝明; pinyin: Gū Cháomíng; born 1954) is a Taiwanese-American economist residing in Japan specializing in balance sheet recessions. Koo was born in Kobe. His father, Koo Kwang-ming, was an activist in the Taiwan independence movement then living in exile in Japan, and the brother of the prominent Taiwanese businessman Koo Chen-fu

Richard C. Ko. Download PDF book format. Choose file format of this book to download: pdf chm txt rtf doc. Download this format book. The Holy Grail of macroeconomics : lessons from Japan's great recession Richard C. Book's title: The Holy Grail of macroeconomics : lessons from Japan's great recession Richard C. Library of Congress Control Number: 2008300045. Publication & Distribution: Basingstoke.

The revised edition of this highly acclaimed work presents cruciallessons from Japan's recession that could aid the US and othereconomies as they struggle to recover from the current financialcrisis.

This book is about Japan's 15-year long recession and how itaffected current theoretical thinking about its causes and cures.It has a detailed explanation on what happened to Japan, but thediscoveries made are so far-reaching that a large portion ofeconomics literature will have to be modified to accommodateanother half to the macroeconomic spectrum of possibilities thatconventional theorists have overlooked.

The author developed the idea of yin and yang business cycleswhere the conventional world of profit maximization is the yang andthe world of balance sheet recession, where companies areminimizing debt, is the yin. Once so divided, many varied theoriesdeveloped in macro economics since the 1930s can be nicelycategorized into a single comprehensive theory- The Holy Grailof Macro Economics

  • Survivors
Richard Koo believes that the Japanese have done exactly the right thing in response to their asset bubble bursting in 1990. Real Estate prices and stock prices crashed by 70%. The response of the Japanese government was to not let the country go into recession but to keep the GDP at zero growth or stagnation. They did this and have done this by 25 years of budget deficits that have raised the national debt from 60% GDP to nearly 250% GDP. Koo thinks this is great. It is a disaster. There is no way that the Japanese will ever be able to pay this back. There are big defaults or big currency devaluations coming.

However, I do think that the book is worth reading. Koo brings forth the concept of "Balance Sheet Recession" which is a deterioration of the assets on a company's balance sheet which makes the company want to pay down debt rather than take it on. Therefore all the monetary policy of increasing money supply will not tempt the companies to borrow. I think he is right on this.

I also think that he presents many data charts from the Great Depression and elsewhere that are useful pieces of info (in fact, I bought two books that he referenced for some of this data).

Economics is a tough subject. Koo praises FDR for raising the US GDP by 48% in 4 years with budget deficits, Public Works Admin, Works Progress Admin etc. Yes, these organizations did put people to work. Some of the stuff was actually useful (like the Grand Coulee Dam). But Koo fails to mention that FDR took the US off the gold standard which helped boost the US GDP (with less valuable dollars).

My warning is not to take what Koo says as gospel, but to say that what he discusses is worth discussing and therefore this book should be read.
  • Obong
In this book Dr. Koo posits that economies in a balance sheet recession, as opposed to a slow down due to decline in aggregate demand, due not respond to textbook monetary remedies involving the use of expansionary monetary policy. The reason, he proposes, is that during this period companies and households are primarily interested in reducing their debt balances. Hence low interest rates provide little incentive for economic actors to invest. The impact is the same as in a Keynesian liquidity trap framework. However, the reason is different. In a liquidity trap, as Keynes proposed, monetary policy is not effective because economic actors do not demand funds because they see no need to invest as they see insufficient demand for their product. In Dr. Koo's framework, these same actors instead are too busy reducing their debt holdings. In this framework, Dr. Koo proposes, monetary policy is not effective while fiscal policy is. Dr. Koo is very careful to emphasize, however, that fiscal effeciveness in the Japanese case has consisted of preventing a collapse of the Japanese economy as opposed to providing a gross positive increase in either employment or GDP. This has made it difficult for proponents to justify the continuation of the policies. Dr. Koo specifically examines the case of the recent 15 year Japanese recession to make his point. This he does well by providing considerable empirical evidence for his views. He makes his argument very convincingly. As a result this is must read book for any serious student of macroeconomics. Considering the fact that the developed world's economies are facing a similar debt problem Dr. Koo's arguments need to be seriously and closely examined.

Despite its strengths, Dr. Koo's framework does have weaknesses. The most important of these, by far, involves the accumulation of debt. Dr. Koo proscribes expansionary fiscal policy to offset the private sectors debt reduction but the million dollar question becomes how long can this continue? Is there a point at which public sector debt accumulation reaches the point where it proves counterproductive? This is a very important question as Japan's GDP to debt ratio, at the time of the latest printing of this book, was about 220%. Authors such as Rogoff (see his "This Time Is Different: Eight Centuries of Financial Folly"), in their research, posit that when debt levels reach about 80% of GDP fiscal policy becomes less efffective. Hence a very important question, very relevant to Dr. Koo's framework, is when does debt reach a limit at which it can limit the use of fiscal policy. This is question that needs to be, simultaneously, answered for Dr. Koo's framework to be applied in real life policy framework over a long term period.
  • Precious
Richard Koo's book sets out clearly and readably his very persuasive analysis of the critical and long-lasting negative effect of excessive debt on the ability of economies to recover from economic recessions, with Japan as the prime example. With the world's major economies still failing to achieve lift-off in a return to historical levels of growth, in spite of monumental monetary stimulus, his explanation is extremely pertinent.
That said, the analysis expressed in his book does not constitute the Holy Grail of macro-economics (which I imagine is: how do you deliver sustained non-inflationary economic growth ?). It is, rather, a well-timed cautionary tale for ministers of finance and central bankers.
  • Vispel
I think this book adds an interesting dimension to macroeconomic thinking. The concept that a negative net worth will make businesses and individuals unresponsive to monetary policy (as they repay debt) has negative implications for aggregate demand. The prescription for fiscal stimulus seems sound, but Koo never describes what happens when governments themselves become insolvent (he just proves that no stimulus leads to higher deficits, without talking much about when government debt is unsustainable). In light of the current Eurozone crisis this is an unfortunate gap.

The book is written in an engaging style, although it is a bit repetitive. The discussion focuses mostly on the historical data necessary to prove the validity of the ideas and the implication of the ideas for policy. With such significant implications for macroeconomic models it is unfortunate that a new or adjusted macroeconomic model was not provided. Overall I really enjoyed this book, I just wish I understood all of its implications.