Reviews from the previous edition "...provide fascinating insights into the problems of Japan...interesting thesis" ( Wilmott.com/blogs , August 2009) "…the Japanese policymakers who told everyone the US was in danger of falling into a prolonged period of economic weakness were right. To understand why this is true, you need to read a brilliant book by Richard Koo of the Nomura Research Institute." ( Financial Times , January 2009) "…the definitive book on Japan′s decade–long recession in the 1990s." ( USA Today , March 2009) "Books about the current global economic crisis are being written and published by the truckload. But few – perhaps none – are worth reading… Richard Koo, chief economist at the Nomura Research Institute in Tokyo, a think tank attached to Japan′s biggest investment bank, watched Japan′s ′lost decade′ from an excellent vantage point: he was close enough to understand the detail, data and ways in which both corporate and political decisions were made, and independent enough to be able to analyse what happened in a reasonably detached and cool way." ( Survival , May 2009) "A must–read to an understanding of what Japan went through and what the United States and Europe may experience is Koo′s latest book The Holy Grail of Macroeconomics: Lessons from Japan′s Great Recession ." ( The Edge Financial Daily , December 2008)
"...provide fascinating insights into the problems of Japan...interesting thesis" (Wilmott.com/blogs, August 3rd 2009)
From the Inside Flap
How did the great Depression of the 1930s get to be so bad for so long? That question has baffled economists for decades. Ben S. Bernanke, the current Fed Chairman, even called understanding the great Depression the as yet–unattained "holy Grail of Macroeconomics." Japan′s Great recession of 1990–2005 finally gave us some vital clues as to how a post–bubble economy can plunge into prolonged recession while leaving conventional policy responses largely ineffective. Building on the author′s earlier work Balance Sheet Recession: Japan′s Struggle with Uncharted Economics and its Global Implications (John Wiley, Singapore, 2003), The Holy Grail of Macroenomics: Lessons from Japan′s Great Recession argues that there are actually two phases to an economy, the ordinary (or yang) phase, in which the private sector is maximizing profits, and the post–bubble (or yin) phase, in which private sector is minimizing debt, or repairing damaged balance sheets. Although conventional economics is useful in analyzing economies in the yang phase, it is less useful in explaining phenomena such as the "liquidity trap" that is typical of an economy in the yin phase. The distinction between the yin and yang phases also explains why some policies work well in some situations but not in others. Indeed, it offers the crucial foundation to macroeconomics that has been missing since the days of Keynes. This groundbreaking book not only explains what happened to the U.S. during the Great Depression and to Japan during the Great recession, it also offers important policy recommendations for fighting post–bubble economic downturns in any country, including the current subprime crisis in the U.S.
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