Think outside the box





Advocates for an even more expansionary monetary and fiscal policy often cite the risk of a Japanese scenario, warning that the euro area faces a similar fate as the Japanese economy, which has suffered from the effects of a deflationary trend during the last two decades. But the situations differ greatly.

First, the Japanese yen appreciated sharply at the beginning of the 1990s, with the result that receding import prices acted as a brake on the general price trend. The euro experienced no such strong appreciation during the crisis.

Second, deflation requires that nominal wages fall, or at least expand at a slower pace than productivity, over a protracted period of time. In Japan, labour income per employee dropped considerably over many years, whereas no such board-based development is to be seen in the euro area. Only in Ireland and Greece has compensation per employee fallen markedly to sharply.

Fear of a Japanese scenario is therefore misplaced.

Moreover, the notion of Japan’s "lost decades" needs to be seen in perspective. The weakness of growth in Japan is partly a natural consequence of the country’s demographic change, as the working-age population has been shrinking since the mid-1990s. And that, by the way, is an economic policy challenge that awaits Germany in the years to come.

A critical view therefore also needs to be taken of the discussion kicked off by former US Treasury Secretary Larry Summers and fuelled by Paul Krugman, about "secular stagnation". Mr Summers recently warned that the US faced the risk of weak growth similar to that in Japan, and called for an even more expansionary demand policy. In so doing, however, he fails to see that the weak real growth in Japan is primarily a long-term structural problem that cannot be remedied in a sustainable manner by demand-oriented economic policy.

The lesson to be learned from the example of Japan, however, is that the job of cleansing bank balance sheets of toxic assets should not be delayed.


  • 1993年からの円高→輸入価格低下→インフレ減速
  • 名目賃金の下落→デフレ
  • 1990年代半ばをピークに労働力人口が減少→供給要因による成長率低下
  • 銀行の不良債権処理の遅れ


  • 円高の放置・あるいは円安反転政策(→デフレ)
  • 雇用の不安定化・賃下げの促進(→デフレ)
  • 人口構造変化に対応した社会保障制度改革・雇用制度改革の遅れ
  • 不良債権処理の遅れ