Speaking as a far-from-expert observer, the Japanese central bank had a more difficult problem. The economy is far more dependent on foreign trade than the US. To prevent a collapse in the 70s from the oil shocks, they pumped up the domestic economy to compensate for the problems on the world market. Once the bubble grew, deflating it was pretty dangerous.
The US was more isolated from world market pressures. As a result, the bubble effect was far milder. Let's see how well Bernanke handles the slowing economy and rising prices. Time will tell. On Sun, Jul 30, 2006 at 03:01:31PM -0400, Yoshie Furuhashi wrote: > > The main claim I heard is that the central bank in Japan was too slow > to raise interest rates in the late 80s and tightened too fast in the > early 90s, in comparison to the way the Fed has managed things here. > Don't know if that's true, and don't know if a different policy could > have made for a different outcome. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
