Causes and Remedies for Japan's Long-Lasting Recession: Lessons for the People's Republic of China

Japan has suffered from sluggish economic growth and recession since the early 1990s. In this paper, we analyze the causes of the prolonged slowdown of the Japanese economy (the lost decade). Economics Nobel laureate Paul Krugman has argued that Japan's lost decade is an example of a liquidity trap. However, our empirical analysis shows that stagnation of the Japanese economy comes from its vertical IS curve rather than a horizontal LM curve, so the Japanese economy faces structural problems rather than a temporary downturn. The structural problems mainly come from the aging demographic, which is often neglected in other studies, and also from the allocation of transfers from the central government to local governments, and the unwillingness of Japanese banks to lend money to startup businesses and SMEs, mainly because of Basel capital requirements. Many countries, like the People's Republic of China, are expected to face similar issues, particularly the aging population, and so are very much concerned about the long-term recession that Japan has experienced. This paper will address why the Japanese economy has been trapped in a prolonged slowdown and will provide some remedies for revitalizing the economy

Japan's Lost Decade: Lessons for Other Economies

Japan has suffered from sluggish economic growth and recession since the 1990s, a phenomenon dubbed "Japan's Lost Decade." The People's Republic of China, many countries in the eurozone, and the United States may face similar problems in future and they have been concerned by Japan's long-term recession. This paper will address why Japan's economy has stagnated since the bursting of its economic bubble. Our empirical analysis challenges the beliefs of some western economists, such as Paul Krugman, that the Japanese economy is in a liquidity trap. We argue that Japan's economic stagnation stems from a vertical IS curve rather than a liquidity trap. The impact of fiscal policy has declined drastically, and the Japanese economy faces structural problems rather than a temporary downturn. These structural problems have many causes: an aging demographic (a problem that is frequently overlooked), an over-reliance by local governments on transfers from the central government, and Basel capital requirements that have made Japanese banks reluctant to lend money to startup businesses and small and medium-sized enterprises. This latter issue has discouraged Japanese innovation and technological progress. The paper will address all these issues empirically and theoretically and will provide some remedies for Japan's long-lasting recession

The EU‐Japan Economic Partnership Agreement as a Norm Model for Sustainable Development Issues in the Future EU FTAs in Asia

This chapter considers how the issues related to sustainable development are formulated and included in the European Union’s (EU’s) free trade agreements (FTAs) and whether they reflect the aims of the parties in setting norms for international trade. It investigates the EU’s recent FTA with Japan and explores whether the EU-Japan Economic Partnership Agreement (EPA) can be regarded as a norm setter on sustainable development issues in the EU’s future FTAs in Asia. The chapter presents an overview of the EU-Japan trade and investment flows, noting some of the imbalances in the bilateral economic interaction related to the FTA negotiations. The empirical part focuses on the findings from the interviews as to the aims, challenges, business reflections, and prospects for implementation of the EPA on sustainable development issues. Finally, the chapter discusses the potential of the EU-Japan EPA to become a norm setter for the EU’s future trade negotiations in Asia. © ISTE Ltd 2020

On the waterfront: Studying the development of residences and workplaces at Norra Älvstranden, Gothenburg, Sweden

Following economic restructuring, waterfront redevelopment emerges as a post-industrial option for struggling cities and regions that will boost economic growth. If functioning according to plan, publicly initiated and privately executed waterfront redevelopment will attract educated and high-income earning residents as it simultaneously transforms derelict industrial grounds into residential areas and science parks. The recent financial crisis of 2008 has seen severe turbulence in the urban economy resulting in for example foreclosures and drops in real-estate value. Drawn on this background, the aim of this paper is to shed light on whether a specific place-based activity: the establishment of a redeveloped waterfront in Gothenburg, Sweden facilitating residences and workplaces, has attracted human capital in the form of residents and workers often termed ‘talented’ and ‘creative’. This paper uses a unique longitudinal micro database (GILDA) containing information on residence, work, age etc. covering the entire Swedish population between the years 1990 and 2008 and focuses on flows of in- and out-migration of two human capital sub-groups; the arts-educated bohemians and the engineering-educated consultants. Results show that the waterfront attracts resident consultants and not bohemians, while the growth of workplaces stagnate and decline following the global economic recession of 2008. The paper contributes to knowledge on the complexity of redevelopment and how difficult it is to manage this process.</p