Richard Koo: Lessons learned from Japan’s “lost decade”

By Prieur du Plessis, on November 9th, 2009 posted in: Investment, Markets, Money

Richard Koo, the world-renowned chief economist of Nomura Research Institute, discussed the lessons learned from Japan’s “lost decade” during a presentation at Center for Strategic and International Studies (CSIS). During his discussion, Koo suggested that government stimulus can play a key role in alleviating the problems of a balance sheet recession. Koo’s recent book, “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession”, discusses these issues in greater detail.

Source: CSIS, October 29, 2009.

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Simon

November 9, 2009 at 11:44 am

Well I watched the whole thing. Very interesting! Some key take away points being a) interest rates are very unlikely to rise because net demand for money is unlikely to increase anywhere until balance sheets are repeared. b) Non recourse loans on US households represent a huge hazard should house prices fall further c) Only governments can fill the demand gap while balance sheets area being repeared d) Currency fluctuations are likely to be wild and not easily predictable while all countries try to achieve an export advantage and all there are no strong economies e) Neoclasical economic theory is not an adequate framework for a balance sheet recession

Jesper Christiansen

November 9, 2009 at 2:29 pm

I think you have the wrong date on this presentation as I think it is from last year, not that it matters so much as the issue more or less are the same today …

rfk

November 10, 2009 at 5:11 am

Thank you for posting, Richard’s comments are very interesting. It was a nice touch to have the National Debt Clock placed next to the video, a very surreal juxtapositioning. We’re snookered no matter what, may as well toss the deck chairs overboard to make room so we can dance like no one is watching, the conga-line forms on the upper deck… no wall flowers, like it or not we’re all in the same boat.