NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Lost Decade in Translation: Did the US Learn from Japan's Post-Bubble Mistakes?

James Harrigan, Kenneth Kuttner

NBER Working Paper No. 10938
Issued in November 2004
NBER Program(s):   ME

In 1991, the Japanese economy ended a historic expansion and entered a period of stagnation that has yet to abate. Nine years later, the US economy ended a similarly historic expansion. There were many similarities in the two countries' expansions: asset price bubbles, a real investment boom, easy monetary policy, and improvements in government finances. In the wake of bursting bubbles, the Japanese banking system was insolvent and monetary policy was too tight, problems not evident in the US post-bubble period. But the US has worse fiscal and current account imbalances than Japan had at the same stage in the post-bubble era.

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Published: Patrick, Hugh, Takatoshi Ito and David Weinstein (eds.) Reviving Japan’s Economy: Problems and Prescriptions. Cambridge, MA: MIT Press, 2005.

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