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Rating: 
Summary: Detailed and Relevant
Review: Posen does a good job of presenting his case that the Japanese recession can be alleviated through the effective use of fiscal policy. He supports his argument well by employing statistical evidence and economic tools. I believe, however, that Posen fails to address the psychological effect the current recession is having on the Japanese government & people. Structural Reform is being instituted rapidly because stagnation has brought about the realization that the current system needs serious overhaul. It also seems to be the case that fiscal policy needlessly pours money into the inefficient construction sector, leading to undesirable consequences in terms of sectoral allocation. Overall, Posen makes a strong argument in favor of fiscal policy. Hopefully he will update his book to explain the current apparent recovery of the Japanese economy.
Rating:
Summary: Detailed and Relevant
Review: Posen does a good job of presenting his case that the Japanese recession can be alleviated through the effective use of fiscal policy. He supports his argument well by employing statistical evidence and economic tools. I believe, however, that Posen fails to address the psychological effect the current recession is having on the Japanese government & people. Structural Reform is being instituted rapidly because stagnation has brought about the realization that the current system needs serious overhaul. It also seems to be the case that fiscal policy needlessly pours money into the inefficient construction sector, leading to undesirable consequences in terms of sectoral allocation. Overall, Posen makes a strong argument in favor of fiscal policy. Hopefully he will update his book to explain the current apparent recovery of the Japanese economy.
Rating: 
Summary: Keynes is alive and well and living in Japan
Review: This is an excellent little book. Posen, an increasingly influential monetary economist, gives us his view on what is wrong and what needs to be done in Japan. While this effort was published in late 1998, the diagnosis and medication prescribed are the same now as then. In Posen's view, all but one of the economic stimulus packages unveiled in the 1990s was equivalent to pouring money down the drain. Government money either wasn't spent at all because regional and municipal governments are bust or money was thrust at wasteful construction industries which add nothing to GDP. Also, monetary policymakers have decided that their new independence means they should do exactly the opposite to what everyone outside the BOJ thinks they should do. So policy is in a state of paralysis. Posen argues that Japan needs aggressive stimulus, both through fiscal and monetary policy channels. In his view, there is nothing terribly wrong with Japan - a very different view from consensus. He also shows that BOJ fears of igniting inflation if they loosen monetary policy aggressively are complete nonsense. This isn't a happy read for amateurs. It's quite in depth and needs some knowledge of the dismal science. It's very mainstream or Keynesian, just in case you were wondering. But it's a good read nonetheless.
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