Mankiw's Strange View of Japan
In his New York Times column today, Greg Mankiw writes:
The economists in the Obama administration are also well aware of the Japanese experience [slow growth since the early 1990s]. That is one reason they are pushing for more stimulus spending to prop up the aggregate demand for goods and services.
But in the article on Japan, written in 2005, in The Concise Encyclopedia of Economics, Ben Powell writes:
Most of Japan’s policies have focused on the traditional Keynesian prescription of increased government spending to boost aggregate demand for goods and services. Since 1992, Japan’s government has tried ten different fiscal stimulus packages totaling more than 135 trillion yen. These packages have accounted for approximately 3 percent of the Japanese economy. None was able to cure the depression, but the spending programs have caused Japan’s official public debt to exceed 150 percent of GDP, up from 40 percent before 1992 and currently higher than that of any other developed nation.
In other words, the Japanese government used stimulus spending and it didn’t work. So how is the Obama administration showing that it is “aware of the Japanese experience?”