Macquarie University

The Japanese Economy - ECON394

This unit is an introduction to the Japanese economy from Meiji to the current Heisei Recession. It serves also as an introduction to development economics. Basic economic models will be used to analyse the past Miracle growth of the Japanese economy. Some of these models, such as the Solow growth model and Friedman's Permanent Income Hypothesis, will be familiar from theoretical units, but will be taught from their basics with no assumed prior knowledge, for practical application in a real economy. Other models commonly found in the Japanese and Asian development literature, such as Harrod, Lewis and Fei-Ranis, are also presented and will be new ground for most students. Many of the problems encountered by the global economy since the beginning of this decade, such as deflation, liquidity traps and crippling public debt, were first seen in the Japanese economy in the 1990s. Also first seen in Japan were the attempted solutions to these problems, such as quantitative easing, and these make study of the Japanese economy particularly relevant now. The unit also covers the wide range of distinctive institutions characteristic of and often unique to the Japanese economy, such as sogo shosha, zaibatsu, and capital and financial keiretsu. This material will be particularly useful for students intending employment in Japanese firms or firms doing business with Japan.