>On Fri, 16 Oct 1998, Jorn Andersen wrote:
>
>> I have read that extra government spending in Japan within the last year or
>> so has been as much as 40 pct. of GNP. I mean: They can do so once and
>> maybe two or three times, but they can't continue to do so, can they?
>> And up to now it seems this public spending has only had a limited effect.
>
>Oh, they have the money alright. After checking with various OECD and
>press reports, it seems that Japan hasn't actually spent all that much in
>the real economy; much of the stimulus packages were smoke-and-mirrors or
>a shifting of accounts. Very little new real money (what the Japanese
>call, picquantly, "real water") was involved; maybe $250 billion or so
>from 1992-96, hardly enough to bestir Japan's massive $4.5 trillion annual
>GDP from its lethargy. This is much less impressive than Germany's $600
>billion 1990-1997 bailout of East Germany, or the billions of
>ECU transferred from the rich EU countries to the semiperipheral ones via
>the EU structural funds and EIB lending and the like.
Actually, according to the OECD, Japanese fiscal policy was pretty expansive in 1995 and 1996, but turned restrictive in 1997 and 1998. It was also restrictive from 1987 to 1991, with structural surpluses averaging close to 2% of GDP. The Ministry of Finance wants to pay down debts left over from the 1970s.
Doug