Front Matter

Front Matter

Alessandro Zanello, and Daniel Citrin
Published Date:
November 2008
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© 2009 International Monetary Fund

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First published 2008 by


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ISBN-13: 9780230219328 hardback

ISBN-10: 9780230219328 hardback

This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin.

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Japan’s economic revival: Policy challenges in a globalized world /

edited by Daniel A. Citrin and Alessandro Zanello.

p. cm. — (International Monetary Fund)

Includes bibliographical references.

ISBN 9780230219328

1. Japan—Economic policy—1989- 2. Japan—Economic conditions—

1989- I. Citrin, Daniel. II. Zanello, Alessandro.

HC462.95.J36876 2008



10 9 8 7 6 5 4 3 2 1

17 16 15 14 13 12 11 10 09 08

Printed and bound in Great Britain by

CPI Antony Rowe, Chippenham and Eastbourne



By most assessments, Japan has closed the chapter on its Lost Decade. It has been a difficult journey, but the dislocations of the bubble-economy are, for the most part, things of the past. Policies and the global upturn that started in 2002 have broken the self-reinforcing cycle of financial instability, low growth, and entrenched deflation. For six years growth has been near potential, the financial system has regained a sound footing, and macroeconomic and structural policies have become increasingly proactive. There is little doubt that Japan is in the best position it has been in a long while to weather the period of global financial turbulence and softening world growth that had emerged at the time of this writing.

This book is about Japan’s recovery and the medium-term challenges ahead. It brings together some of the analytical work that has underpinned the IMF’s policy assessment and advice over the last four years. As such, the book also provides insights on how the IMF staff has engaged Japanese policymakers in the policy dialog that is at the heart of Fund surveillance. From this angle, a recurring theme in the book is that this engagement must be informed by both a national and an international perspective, for there is no clear boundary between the domestic and the international impact of policies in a closely interconnected world.

The breadth and depth of the relevant international linkages make the subject matter of the book more than just a “Japan story.” Japan’s stagnation in the aftermath of the bursting of the bubble contributed to a lopsided pattern of world growth and the emergence of threatening current account imbalances among the largest economies. Thus, Japan’s economic revival will have global consequences. As Japan readies itself to meet the challenges of a globalized world, a more resilient world economy will be in the making.

John Lipsky

First Deputy Managing Director

International Monetary Fund


We would like to acknowledge valuable comments on earlier versions of the chapters in this book by many colleagues at the IMF and in Japan. Fritz Pierre-Luis, Janice Lee, and Ioana Hussiada provided excellent research assistance; Kym Fisher gave extraordinary secretarial support; and Ray Addicott coordinated editing and production. Our thanks to them all.

The views expressed here, as well as any errors, are sole responsibility of the authors and do not necessarily reflect the opinions of the Japanese authorities, the Executive Board of the IMF, or other members of the IMF staff.

Notes on Contributors

Nicoletta Batini is Senior Economist, Western Hemisphere Department, International Monetary Fund.

Dennis Botman is Economist, Fiscal Affairs Department, International Monetary Fund.

Hali Edison is Senior Economist, Asia and Pacific Department, International Monetary Fund.

Christopher Faulkner-MacDonagh is Senior Economist, Asia and Pacific Department, International Monetary Fund.

Dora Iakova is Deputy Division Chief, European Department, International Monetary Fund.

Michael Keen is Advisor, Fiscal Affairs Department, International Monetary Fund.

Yougesh Khatri is Senior Economist, Asia and Pacific Department, International Monetary Fund.

Charles Kramer is Division Chief, Asia and Pacific Department, International Monetary Fund.

Bradley McDonald is Senior Economist, International Monetary Fund.

Shinobu Nakagawa is Director, Investment and Market Research, International Department, Bank of Japan.

Papa N’Diaye is Economist, Asia and Pacific Department, International Monetary Fund.

Alessandro Rebucci is Senior Economist, Research Department, International Monetary Fund.

Mark Stone is Deputy Division Chief, Monetary and Capital Markets Department, International Monetary Fund.

W. Christopher Walker is Senior Economist, Monetary and Capital Markets Department, International Monetary Fund.

Alexander Wolfson is Director, Global Country Risk Management Group, Citibank.

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