Current Issues in the Japanese Economy
Ryoichi Imai
International Student Center, Kyushu University
February 24, 2003
Contents
This course is designed to provide opportunities to acquire some fundamental knowledge of the Japanese economy at both macroeconomic and microeconomic levels. In the spring semester, the lecture will focus on the structural problems of the Japanese Economy, such as the productivity gap between manufacturing and non-manufacturing sectors, inefficiency of corporate governance, the fragile financial system, useless public investments, and inflexible corporate personnel practices.
Organization, Attendance, and Other Requirements
Course attendants are required to work (as homework) on three or more reading materials in English, and present their original work in the class. Regular class attendance is strictly required. Your grade heavily depends on your performances in the class discussion, the presentation, and the homeworks.
This course consists of one 90-minute session over the course of 15 weeks. The course begins with the instructor's lecture. Through the lectures along the course, the participants are expected to be familiarized with analytical tools and viewpoints. The last several sessions before the final exam are saved for the participants' presentation of one of the reading materials listed below, or their original work.
None.
Assessment Details (as of February 2003)
Class Attendance and Discussion 20%
Homework 30%
Presentation 20%
Written Final Examination (books closed) or Report (Essay) 30%
Part A (1 session). Review of the Japan-US Economic Relationship after WWII.
It is necessary to start our discussion of the contemporary Japanese economy with a brief review of the Japan-US economic relationships after WWII. We will pay a special attention on the history of the Japanese Yen in the development of the international currency system
Readings: Lecture Notes.
Homework 1: A Short Course in Miracles: Asia before the Crisis, from Krugman [1999] (Due in two weeks).
Part B (6 sessions) Some Basic Knowledge of Economics.
Before working with the current issues of the Japanese Economy, we must be armed with some basic theoretical tools, and share the essential viewpoints toward various topics. The instructor will provide a short course of lectures, focusing on the definitions, concepts, and models. The main topics include:
B1. Lending and Borrowing across National Borders: A Simple Model of International Capital Flow.
B2. What is money?: The Credit Creation and the Roles of the Central Bank.
B3. The Fundamentals and Bubbles of Asset Prices.
B4. The Intertemporal Budget Constraint: The Dynamics of the Assets and Liabilities.
B5. The Government Finance: Tax and Debts.
B6. Corporate Governance.
During the Course, the instructor will assign Homework 2 and Homework 3, which are due in 4 weeks, respectively. The readings for the homework are to be chosen from the list below.
Readings: Lecture Notes.
Part C (2 sessions) Review of the Homeworks.
The Instructor will spare two sessions for the review of the Homework assignments. It is not only the explanation of the solutions, but the sharing of your understandings based on the homework in the class.
Part D (4 sessions) Students' Presentation
All the course attendants are required to present one article chosen from the list below or their original work.
Part E (2 sessions) Course Review and Final Examination
In the last session before the Final Examination, the Instructor will provide a review of the course contents.
The detail of the Final Examination is not yet determined. It may or may not be replaced by the Final Report (Essay).
The Instructor will select two articles from the following list as Homework 2 and Homework 3.
Also, students can present one articles from the list or their original work in the Part D of the course.
Books
Blomstroem, Corbett, Hayashi, and Kashyap [2003, forthcoming], Structural Impediments to Growth in Japan, University of Chicago Press.
Financial Sector Profitability and Double-Gearing Version of October 30, 2002, replacing the version of February 25, 2002
Mitsuhiro Fukao, Keio UniversityInefficiency of Corporate Investment and Distortion of Savings Behavior in Japan Version of November 25, 2002
Albert Ando, University of Pennsylvania and NBER
Dimitrios Christelis, University of Pennsylvania
Tsutomu Miyagawa, Gakushuin UniversityConstraints on the Level and Efficient Use of Labor in Japan Version of February 2003, replacing the version of December 2002
Hiroshi Ono, Stockholm School of Economics
Marcus E. Rebick, Oxford UniversityKrugman, Paul [1999], The Return of the Depression Economics, Norton.
Yoshikawa, Hiroshi [2002], Japan's Lost Decade, International House of Japan.
Chapter 2: Bad Debts and the Japanese Economy.
Chapter 3: Exchange Rates.
Chapter 4: Japan's Manufacturing and Nonmanufacturing Industries.
Articles
Bernanke, Ben S. [2000], Japanese Monetary Policy: A Case of Self-Induced Paralysis?, in Mikitani and Posen (ed.), Japan's Financial Crisis and Its Parallels to U.S. Experience, Institute for International Economics.
Hayashi, Fumio and Edward C. Prescott [2002], The 1990s in Japan: A Lost Decade, Review of Economic Dynamics .
Hoshi and Kashyap [2001], Benefits and Costs in Keiretsu Financing, in Corporate Financing and Governance in Japan, MIT Press.
Prescott, Edward C. [1998], Needed: A Theory of Total Factor Productivity, International Economic Review, 39(3), 525-551.