Clinton era Japan policy mysteries

Bradford DeLong jbdelong at uclink.berkeley.edu
Sat Jun 29 07:04:42 PDT 2002



> >Japan policy? What mysteries are there >about
>Japan policy?
>>Brad Delong
>
>Mysteries? Who said anything about mysteries?
>When I joined this list most were oblivious about
>anything the US has done in Japan policy during
>the past ten years (probably still are), so I
>guess the better term would be 'ignorance'.
>
>Rather
>
>What was the logic behind the strong yen cheap
>dollar policy?
>
>When did 'they need to boost personal
>consumption' become the dominant theme and why?
>Whose theory was that?
>
>Was it just naked economic nationalism that
>dominated Asia policy under Clinton?
>
>CJ
>

I think you have to distinguish between policy during the first two and a half years or so of the Clinton administration, during which the principal policy aim was to redivide the surplus from U.S.-Japan trade more in favor of the U.S. Then by the middle of 1995 the consensus suddenly shifted to a belief that Japan's economy was in real trouble, that a stagnant Japan was a very bad thing for the world (and for the U.S. too, in the long run), and that the U.S. needed to stop pressuring Japan on trade issues but instead to use whatever leverage it had to get Japan to take policy steps--cleaning up its banking system, boosting consumption--to get itself back to full employment. This point of view was strengthened by the Asia crisis, for it seemed that the lack of demand for products of other Asian countries by Japan was a big factor making the Asia crisis worse...

Brad DeLong



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