Both Japan and the United States are vulnerable to the same macroeconomic policy mistakes -- overreacting to short-term bad news and making wrong policy decisions, a renowned American economist warned during a recent symposium held in Tokyo.
The recent drop in growth forecast in the two countries has prompted calls for radical policy shifts -- fiscal and monetary consolidation in Japan and quick implementation of a large tax cut in the U.S. -- but "this is an overreaction," Adam Posen, a senior fellow at the Institute for International Economics, told the symposium on Japanese-U.S. economic relations under the new Bush administration, held Jan. 17 by the Keizai Koho Center.
Opening the symposium, Mitsubishi Corp. Chairman Minoru Makihara, acting chairman of Keizai Koho Center, told the audience that 2001 will be a crucial year for Japan, with the whole world watching "with concern and keen interest" how the Japanese economy pulls itself from the doldrums of the 1990s.