Assignment:
1. After the US occupation ended, the Japanese government formed MITI to plan for Japan's industrial development. What were the levers that MITI used to push private firms toward investing in industries MITI wanted to promote?
2. MITI insisted that the keiretsu implement labor/management reforms. What reforms did they require? Why was this seen as important?
3. What were the four phases of "scrap and build" that characterized Japanese industrialization from 1950s-1980s? For each phase, you should be able to explain which industries were scrapped and which promoted and the forces that drove MITI and the big firms to change course.
4. How did the 1985 Plaza Accord lead to the high-yen crisis? Hart-Landsburg states that wages were too low in yen terms but too high in dollar terms - explain. How did Japanese firms respond to the high-yen crisis? How did this contribute to the "bubble economy" of the late 1980s?
5. The Bank of Japan cut interest rates to zero after the collapse of the bubble, but business investment spending did not revive. Many economists argued that the country was in a liquidity trap. Explain what this means.
6. Koo writes that there is no evidence of a liquidity trap. What facts does he city to support this?
7. Koo contends that the real problem during the 1990s was a "balance sheet crisis" Explain.
8. Since the 1990s, the Japanese government has used highly stimulative fiscal and monetary policies to maintain economic stability and this has continued until today. How stimulative has policy been? Provide some basic data.
9. The third arrow of Abenomics proposes many reforms to the labor market and to address a rapidly aging workforce. What are some of these reforms?