Yen still overvalued\Japanese "Keynsianism"

[Paul_A <paul_a@xxxxxxx>]

Isn't this a bit out of date?  The Japanese had been bashed for not running
large fiscal deficits but for the last few years DID turn to fiscal
Keynsianism, and on a large scale (sorry, I don't have the numbers handy).

What is significant - and scary - is how little it has worked.  Perhaps
this has been the largest test of "Keynsianism" in modern history (well,
the standard 'hydraulic' version of Keynes).  Certainly it is the first
case of a major industrial economy turning to this standard perscription
for a mid-size crisis (since these only appear every few decades).

It all strikes me as a very under-studied issue considering it involves one
of the core precepts of a major political (and theoretical) stream.

Paul A


At 02:09 PM 3/6/02 -0800, you wrote:
>Gil writes:>The interesting question, in light of Peter's assessment, is why
>the Japanese
>government can't use traditional Keynesian fiscal tools to pull itself out
>of
>the recession.<
>
>1) the IMF and the assembled economic pooh-bahs argue against it.
>2) they've already done it a lot, building a lot of infrastructure, much of
>it useless, but never enough to get the Japanese economy moving again.
>3) they don't want to get into raising government consumption (building
>pyramids, as Keynes suggested) and they're still restricted from doing
>Military Keynesianism.
>
>But that doesn't mean that fiscal policy couldn't be used. My idea is that
>they should stimulate the Japanese economy by giving foreign aid to poor
>areas (such as East St. Louis, IL) that's "tied," i.e., can only be spent on
>Japanese goods. This is what the U.S. did for many years.
>
>Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine
>
>