A Comparative Analysis of the

Japanese and U.S. Economies



Spring 2002

Tuesdays 6:00 p.m.-8:50 p.m.

Room: TBA


Professor Ryuzo Sato

C.V. Starr Professor of Economics and Director

The Center for Japan-U.S. Business and Economic Studies

Leonard N. Stern School of Business

Office:  KMC 7-190

Phone: (212) 998 – 0750

Fax: (212) 995 – 4219

E-mail: rsato@stern.nyu.edu


T.A. Carlos Gutierrez

E-mail: cag244@nyu.edu


Office Hours: Mondays and Wednesdays 1:00 p.m. – 3:00 p.m., or by appointment


Course Description

This course examines the Japanese economy as an application of modern macro- and micro- economics. Provides a comparative analysis of the Japanese economy, in particular, with the U.S. economy. Topics include historical perspective and modernization, postwar economic growth and technical change, industrial structure, public finance and tax system, financial liberalization, political economy of trade friction, exchange rate, and Japanese management styles.


Course Requirements

Students will be evaluated by a take-home test, an in-class test, a presentation and classroom participation. Presentations will be made in April, and the in-class test will be given on Tuesday, April 30th, the last day of class. There will be no final examination.



The course grade will be determined as follows:

            Take-home test                      25%

            In-class test                               30%

            Presentation                             25%

            Classroom participation             20%

Course Outline


1.             Introduction and Overview

·        Industrialized society

·        Japanese economic success

·        The increasing role of  Japan in the international economy


2.         The Japanese Economy in the 21st Century

·        Current issues of the Japanese economy

·        Singularity point and comparative advantages

·        The bubble economy

·        Japan in the 21st century: structure change or perpetual stagnation?


3.             Economic Growth

·        Factors of economic growth

·        Competition among companies

·        Economic planning

·        Japan’s growth “miracle”: why it occurred and how it came to an end


4.         Fiscal Policy

·        Tax structure in Japan

·        Government spending

·        Budget deficit


5.             Monetary Policy and Financial Markets

·        Money and prices

·        Inflation and oil shocks

·        Finance in Japan and in the U.S.

·        Features of the Japanese financial markets


6.             International Trade

·        The international economy with or without a big country

·        Changes in industrial structure and patterns of trade

·        Strategic trade

·        Japan-U.S. conflicts


7.            International Finance

·        Secret of the yen

·        Fluctuating value of the yen

·        Role of the yen in the international marketplace

·        Towards a new way of exchange


8.         Savings and Investment

·        Why is Japanese savings so high?

·        Investment and cost of capital

·        Investment in human capital

·        Japanese educational system


9.             Industrial Policy and Industrial Structure

·        Increasing and decreasing profit margins

·        Changing picture of industrial distribution

·        Development of the services economy

·        Japanese industrial policy


10.             Technical Change

·        Technical change and Japanese R&D

·        Basic versus applied technology

·        Technology transfer and technology game


11.            Distribution System

·        Purchasing Power Parity

·        Why are Japanese prices so high?

·        Transition to large-scale retailing


12.       Total quality control and the just-in-time method of inventory control

·        Labor unions

·        Zaibatsu versus keiretsu

·        The turnover of the top management and the new entrepreneurial manager


Course Schedule


1.             Lectures (9 weeks)

·        January 22 and 29

·        February 5, 12, 19 and 26

·        March 5, 8 and 26


2.             Presentations (3 1/2 weeks)

·        April 2, 9, 16 and 23 (first half of the class)


3.         Review

·        April 23 (second half of the class)


4.         In-class test

·        April 30

Course Materials


General References

While there is a number of books that discuss various aspects of the Japanese economy, there is no single book that covers all of the topics examined in this course at a basic level. The following book, however, is required


·        Sato, R., The Chrysanthemum and the Eagle: The Future of U.S.-Japan Relations, NYU Press, 1994.


The following materials present useful insights on the Japanese economy. They are provided to assist you in gathering primary research for your presentation.


1.             Journals

·        Japan and the World Economy, The Center for Japan-U.S. Business and Economic Studies and North Holland.

·        Japanese Economic Studies, M.E. Sharp

·        Journal of the Japanese and International Economy,  Academic Press


2.         Books

·        Allen, G.C., Japanese Economy, St. Martin Press, 1981

·        Aoki, Masahiko, Economic Analysis of the Japanese Firm, North Holland, 1984.

·        Blomstrom, Magnus,  Gangnes, Byron and Summer La Croix, Japan’s New Economy, Oxford University Press, 2001.

·        Calhoun, Michael, The Silver Market, Japan Society, 2001.

·        Carlile, Lonny, Is Japan Really Changing Its Ways?: Regulatory Reform and the Japanese Economy, Brookings Institute, 1998.

·        Elton, Edwin J. and Martin J. Gruber, Japanese Capital Markets: Analysis and Characteristics of Equity, Debt and Financial Futures Markets, Harper & Row, 1990.

·        Flath, David, The Japanese Economy, Oxford University Press, 2001.

·        Gibney, Frank. Unlocking the Bureaucrat’s Kingdom: Deregulation and the Japanese Economy, Brookings Institute, 1998.

·        Green, Michael, Terrorism: Prevention & Preparedness, Japan Society, 2001.

·        Hayes, Declan. Japan’s Big Bang: The Deregulation and Revitalization of the Japanese Economy, Charles E. Tuttle Co., 2000.

·        Hsu, Robert  C., The MIT Encyclopedia of the Japanese Economy, MIT Press, 1999.

·        Hsu, Robert C., The MITI and the Japanese Miracle, Stanford University Press, 1984.

·        Kosai, Yutaka and Yoshitaro Ogino, Contemporary Japanese Economy, M.E. Sharp 1984.

·        Krugman, Paul (ed.), Trade with Japan, University of Chicago Press, 1991.

·        Milhaupt, Curtis J. Japanese Law in Context: Readings in Society, the Economy and Politics, Harvard University Press, 2001.

·        Morgan, James and Jeffrey Morgan, Cracking the Japanese Market: Strategies for Success in the New Global Economy, Free Press, 2001.

·        Nakamura, Takafusa, Lectures on Modern Japanese Economic History: 1926-1994, LTCB International Library Foundation, 1994.

·        Nakamura, Takafusa, The Post-War Japanese Economy (2nd. edition), University of Tokyo Press, 1995.

·        Pepper, Thomas, Merit E. Janow and Jimmy W. Wheller, The Competition Dealing with Japan, Praeger, 1985.

·        Pugel, Thomas A. and Robert Hawkins (eds.), Fragile Interdependence: Economic Issues in U.S.- Japanese Trade and Investment, Lexington Books, 1986.

·        Saito, Mitsuo, The Japanese Economy (Economic Ideas Leading to the 21st Century), World Scientific Pub Co., 2000.

·        Sato, Ryuzo and Paul Wachtel (eds.), Trade Friction and Economic Policy: Problems and Prospects for Japan and the United States, Cambridge University Press, 1987.

·        Shishido, Toshio and Ryuzo Sato (eds.), Economic Policy and Development: New Perspective, Auburn House Publishing, 1985.

·        Suzuki, Yoshio, The Japanese Financial System, Oxford University Press, 1990.

·        Tabb, William K., The Postwar Japanese System: Cultural Economy and Economic Transformation, Oxford University Press, 1995.

·        Takatoshi, Ito. The Japanese Economy, MIT Press, 1992.

·        Viner, Aron, Inside Japanese Financial Markets, Dow Jones-Irwin, 1988.

·        Whittaker, Hugh and D.H. Whittaker, Small Firms in the Japanese Economy, Cambridge University Press, 1999.

·        Yamada, Makiko. Japan’s Top Management from the Inside (Studies in the Mordern Japanese Economy), Palgrave, 1998.

·        Yoshikawa, Hiroshi. Macroeconomics and the Japanese Economy, Oxford University Press, 1995.


3.         White Papers, Official Statistics

·        Asia Yearbook

·        Industrial Review of Japan

·        Japan Economic Almanac

·        OECD Handbook: Japan

·        White papers on Japan