the Japanese Economy.

Cover
The Japanese Economy
Copyright
Dedication
Preface to the Third Edition
Preface to the Second Edition
Preface to the First Edition
Contents
List of Figures
List of Tables
Editor’s Note
Introduction
	The principles of economics apply in Japan as they do elsewhere
	Major themes
		Japan’s economic growth and development
		Japan’s integration with the world economy
		Government policies and their effects
		Economic institutions and practices peculiar to Japan
	A final comment
1: Incomes and Welfare of the Japanese Today
	GDP and national income
		Spending is either for consumption, investment, or accumulation of foreign wealth
		Investment contributes to sustainable consumption
		Consumption levels and national income
	Real income indices and revealed preferences
		The index number problem
		Substitution
	Nonmarket goods
		Shadow prices of nonmarket goods
		Comparing the value of nonmarket goods in Japan and the United States
	The distribution of wealth
	The underground economy
	Conclusion
	FURTHER READING
2: Economic History, Part 1: The Tokugawa Period (1603–1868) and the Meiji Era (1868–1912)
	Tokugawa Period (1603–1868)
		Precursors of the Tokugawa hegemony
		The baku-han system
		The caste system (shi-nō-kō-shō )
		Alternate attendance (sankin kōtai )
		The honbyakushō system
		The seclusion policy (sakoku)
		Economic development during the Tokugawa era
	The Meiji era (1868–1912)
		Early steps of the new government, 1869–1871
		Land tax reform
		Dispossession of the samurai
		Administration of the Finance Ministry under Matsukata, 1881–1886
		Industry, trade, and imperialism in the late Meiji era
		Meiji industrialization in light of the Gerschenkron thesis
	Conclusion
	FURTHER READING
		Data
		Tokugawa Period
3: Economic History, Part 2: The Twentieth Century (1912–1945)
	World War I boom
	Zaibatsu
	Small firms
	The 1920s: party politics and deflation
	Military government and the wartime economy, 1931–1945
	Conclusion
	Appendix
	FURTHER READING
4: Economic History, Part 3: Postwar Recovery (1945–1964)
	The American Occupation, 1945–1952
		Democratization
		The rise and fall of government controls over the postwar economy
	The Solow growth model
		Basic premises of the model
			Constant returns to scale
			Constant national saving rate
			Constant growth rate of labor
		Technological change
	The Solow growth model and Japan
		The Japanese production function
		Return to steady state
	Conclusion
	FURTHER READING
5: Saving
	Measurement of saving
	Trends and fluctuations in Japanese national saving
	Government saving
	Saving rates of Japan versus other countries
	Theories of saving
		Life-cycle paradigm
		Ricardian paradigm
		Keynesian views on saving
	Analysis of Japanese saving patterns
	Conclusion
	FURTHER READING
6: Macroeconomy
	Business cycles in Japan
		Severity of Japan’s recent recessions
	Aggregate demand: money and monetary policy
		Japan’s money stock
		Quantity equation
		The quantity equation and the aggregate demand curve
		Instruments of monetary policy in Japan
		Monetary policy and Japanese business cycles
	Aggregate supply: output and employment
		Unemployment rates in Japan
		The natural rate of unemployment
		Underlying reasons for Japan’s low natural rate of unemployment
			Lifetime employment
			Minimum wage laws
			Unemployment compensation
			Demographic structure of the labor force
		Business cycles and employment in Japan
	Macroeconomic policy and performance in Japan
	Conclusion
	Appendix: Unemployment statistics of Japan
	FURTHER READING
		Data
		General
7: International Finance
	Balance of payments
		Current account imbalance
	Exchange rates and terms of trade
		Interest parity
		Purchasing power parity
		The Balassa Samuelson effect
	Exchange rate movements and the current account
		The M arshall–Lerner condition
		The J-curve
		Hysteresis in the supply of imports and exports
	Conclusion
	FURTHER READING
8: International Trade
	Gains from trade
		The compensation principle
		National gains from trade in a world of two goods
		Measuring Japan’s gains from international trade
	Composition of Japanese trade
		Comparative advantage
		Scale economies
	Foreign direct investment
		Comparative advantage as a rationale for foreign direct investment
		Multinational enterprises
		Why is Japan’s stock of inward foreign direct investment so low?
	Japanese trade policy
		International negotiations and Japanese liberalization
		Trade friction
	Conclusion
	FURTHER READING
9: Industrial Policy
	Thinking about industrial policy
		“High value-added”
		National defense
		Marshallian externalities
		International oligopoly
		High technology
	History of Japanese industrial policy
		Industrial policy in the century before the postwar era
		Industrial policy in the postwar era
	Analysis of Japanese industrial policy
	Conclusion
	FURTHER READING
10: Public Economy, Part 1: Government Spending
	The public sector of Japan
		Government production in Japan
		Government provision of goods in Japan
		Politics, voting, and public choice
		Some tentative conclusions
	Public goods
		Local public goods
		International public goods
	Other components of government expenditures
		The social security system of Japan
			Redistribution
			Insurance
			The intergenerational bargain
		The government health insurance system
		Education
	Conclusion
	FURTHER READING
11: Public Economy, Part 2: Taxes
	Taxes in Japan
		Meiji era and early twentieth century
		The current tax system
			Personal taxes and corporate income taxes
			Consumption and excise taxes
			Taxes on wages
	Tax burden and incidence
		Tax incidence
			Incidence of an excise tax or wage tax
			Incidence of corporate income tax
	Tax burden
		Tax reform and excess burden
	Government borrowing
		Tax smoothing
		Sustainability of government debt
	Conclusion
	FURTHER READING
12: Environmental Policy
	Four environmental crises
		Mercury poisoning in Minamata
		Mercury poisoning in Niigata
		Cadmium poisoning in Toyama
		Industrial pollution in Yokkaichi
	Policies for meeting environmental standards in Japan
		Economic incentives for pollution abatement
		The 1973 Law for Compensation of Pollution-Related Health Injuries
			Economic analysis of the compensation law
		The “polluter pays principle”
	Spillovers
		Right to sunshine
			Shinkansen noise
		Private versus public administration of spillover disputes
	Law and lawyers in Japan
		Infrequency of litigation in Japan
		Product liability law
	Conclusion
	FURTHER READING
13: Industrial Organization
	Japan’s business groups
		Financial keiretsu
		Enterprise groups (kigyō shūdan)
		The economics of cross-shareholding
		Vertical integration
	Industrial concentration and oligopoly in Japan
		Factors besides concentration that influence price competition in Japan
			Antimonopoly laws of Japan
			Long-term trading ties
		Welfare losses arising from oligopolistic pricing in Japan
	Regulation
		Regulatory institutions
		Rationale for regulation
		Deregulation: a new era?
	Conclusion
	FURTHER READING
14: Finance
	Financial intermediaries
		Commercial banks
		Credit associations and co-ops
		Insurance companies
		Securities companies
		Government financial intermediaries
		Other intermediaries
	Securities markets of Japan
		Money markets
			Interbank markets
			Open markets
		Capital markets
			Bond markets
			Stock markets
	The Euromarket
	Regulation of financial markets
	Origins of banking regulation
	Occupation reforms of Japanese financial markets
		Deregulation of Japanese financial markets
		Financial crisis and government response
	The main bank system
		Origins of the main bank system
		Character of the main bank relationship
			Asset substitution
			Information asymmetry
		Stockholding by banks
		Main banks and financial distress
		Resilience of the main bank system
	Debt versus equity
		The M-M thesis
		Taxes and corporate finance
		Corporate governance and the monitoring of corporate investments
	Conclusion
	Appendix A: Chronology of Changes in Regulation of Japanese Financial Markets
		Prewar era
		Occupation era and afterwards
		First steps toward deregulation
		BIS capital adequacy standards
		Financial System Reform Act
		The “Big Bang”
	FURTHER READING
15: Marketing
	Structure of Japan’s distribution sector
		Density of retail stores in Japan compared with other nations
		The Large Store Law
		Economics of retail density
			Economic order quantity model
			Why are there so many retail stores in Japan?
		Political economy of the Large Store Law
		The complexity of wholesale marketing channels in Japan
	Vertical restraints
		Monopolistic manufacturer and independent distributors
		Resale price maintenance
			RPM as a device for cartelization
			RPM and retailers’ incentives to provide special services
		Customer assignments/exclusive territories/ exclusive agency
		Exclusive dealing
		Manufacturer acceptance of returns
	Conclusion
16: Labor
	Lifetime employment and seniority-based wages
		Economic rationale for lifetime employment and seniority-based wages
			Company-specific skills
			Agency
		Historical origins of the distinctive employment practices of Japanese firms
		Further evidence
	Bonuses
	Enterprise unions
		Nature and extent of unionization
		Bargaining and strikes
	Japanese women and the labor market
		Career choices
		Equal employment opportunities
	Conclusion
	FURTHER READING
17: Technology
	Extent of resources devoted to invention and discovery
	Measuring the returns to research and development
	Japan’s patent system
	Effects of licensing and imitation on the allocation of resources to invention
	Japan as a technological innovator
		The Toyota system of production management
	Conclusion
	FURTHER READING
Glossary
Index