Last week saw the 9th quarterly meeting of Kaleidic Economics, and the topic was low growth scenarios, with a particular focus on Japan.
In the paper we discuss the conflicting debates about the extent to which "the lost decade" is a myth, and whether this is a result of too much, or too little, policy response. The table below shows some typical literature, and interestingly demonstrates that even within the scame school of thought, there are differences of opinion.
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Policy response |
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Loose |
Tight |
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Lost decade? |
Myth |
(i) ? |
(ii) Kelly (2011) Krugman (2013)? |
|
Reality |
(iii) Powell (2002) Shostak (2013) |
(iv) Krugman (1998) Greenwood (2006) |
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Readers may also be interested in the chart showing Japanese GDP per capita relative to Germany, throughout the so-called lost decade [via http://www.tradingeconomics.com/]:
