ECON 332 -Japan

What were the major pre-WWII Japanese conglomerates?

Zaibatsu

What were the post-WWII replacements for Zaibatsu?

Keiretsu

What three reforms defined post-war Japan’s economic path?

Land reform; labor laws; dissolution of Zaibatsu (replaced by Keiretsu)

What factors contributed to Japan’s economic miracle?

High savings and investment; bank-based finance; government-business coordination; keiretsu structure; labor stability; export-led growth; iron triangle

Which ministry led Japan’s industrialization?

MITI (Ministry of International Trade and Industry)

What is the defining feature of Japan’s postwar labor market?

Lifetime employment (implicit contracts)

How should Japan’s labor market be described overall?

Relatively inflexible in theory but flexible in practice

What characterized Japan’s economy from 1945–1973?

Miracle economy (rapid growth)

What characterized Japan’s economy from 1973–1992?

Moderate growth

What characterized Japan’s economy from 1992–2003?

Stagnation (lost decade)

What characterized Japan’s economy from 2003–2007?

Modest recovery

What characterized Japan’s economy post-2007?

Low or near-zero growth

What caused Japan’s initial downturn in the 1990s?

Bank of Japan policy mistake (easy money → bubble → slow response)

What demographic factor contributed to Japan’s stagnation?

Aging population and low birth rate

What structural factor contributed to Japan’s stagnation?

Declining manufacturing share (hollowing out)

What are the three arrows of Abenomics?

Fiscal stimulus; monetary easing; structural reform

What is the goal of fiscal stimulus under Abenomics?

Increase government spending to boost GDP

What is the goal of monetary easing under Abenomics?

Increase money supply, raise inflation, stimulate demand

What is the goal of structural reforms under Abenomics?

Improve productivity, labor participation, and competitiveness

Which central bank has the largest asset-to-GDP ratio?

Bank of Japan (BOJ)

According to Sato, what does Japan need for economic recovery?

Structural reforms and more efficient allocation of resources

What were key features of traditional Japanese corporate governance?

Cross-shareholding; insider control; main bank system; close government ties; lifetime employment

What changes are occurring in Japanese corporate governance?

Decline in cross-shareholding; more foreign investors; greater transparency; shift to market-based governance

Why is Japan at a “dangerous crossroads”?

Aging population; global competition; inefficiencies in traditional system; pressure for reform

Why is moderate inflation necessary in Japan?

Avoid deflation; reduce real debt burden; stimulate spending and investmen