RE: Yen still overvalued\Japanese "Keynsianism"

["Devine, James" <jdevine@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 Isn't this a bit out of date?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).<

If it's out of date, I'd like to know. I'm not a student of Japan as much as
I'm curious. I'd heard that the fiscal deficits were stop-and-go in nature,
perhaps being cyclical rather than structural in nature (i.e., being due to
stagnation rather than as an effort to fight stagnation).

(BTW, I understand that much of Japan's trade surplus is due to its economic
stagnation, at least according to the recent article in MONTHLY REVIEW by
Halevi and another author.)

>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).<

If an active Keynesian fiscal stimulus program is failing, that's
earth-shaking to the Keynesian perspective.

Krugman, who dismisses fiscal stimulus out of hand, never uses the "fiscal
policy has failed to stimulate demand" line. Instead, he complains about the
worthless investment projects the Japanese government engages in (bridges
that go nowhere, etc.) This suggests that even anti-Keynesians don't see the
demand-stimulus piece of fiscal policy as ineffective.

Jim Devine.