Policy Options for Japan's Revival

Since the Great Earthquake last year, the policy discussion has been naturally
centered on restoration and reconstruction measures, and the discussion on
fiscal consolidation comes into focus recently. On the other hand, however, the
discussion about growth strategy has been pushed on the back stage. It is needless
to say that restoration and reconstruction from the disaster and fiscal consolidation
are important, but, the lack of a sure growth strategy which is consistent with these efforts may lead Japanese economy to stagnation. Japan should implement
comprehensive policies which aim at reviving Japanese economy as soon as

The report by Professor Takeo Hoshi and Professor Anil K Kashyap, "Policy Options
for Japan’s Revival", discusses desirable policy directions and options. They argue
that the importance of Japan’s productivity growth has not been invalidated by the
disaster, and suggest that Japan should consider the restoration and reconstruction
from the Earthquake as a great opportunity to reposition its policies.

In this report, they identify concrete steps Japan can take to jump start growth in
three broad themes; Regulatory reforms (reducing the costs of doing business,
stopping protection for zombie firms, deregulation especially in non-manufacturing
sectors and growth enhancing special zones); Opening-up of Japanese economy
(trade liberalization, reduction of agricultural subsidies and new immigration policy);
and Macroeconomic policy reforms (fiscal consolidation and monetary expansion to
end deflation).

Takeo Hoshi
NIRA Visiting Research Fellow / Professor, School of International Relations and Pacific Studies, University of California, San Diego
Anil K. Kashyap
NIRA Visiting Research Fellow / Professor, Booth School of Business, University of Chicago