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Changing U.S.-Japan economic relationships and international payments imbalances.

The economic relations between Japan and the U.S. have changed subtantially. Japan is now the world's largest creditor nation, while the U.S. is the largest debtor. The U.S. still has the largest GNP in the world, with Japan second, but Japan's technological and financial power has increased enormously. After a brief review of the international dollar problem of the 1980s, the author discusses international management of the dollar. This management is difficult because of persistent U.S. budget deficits. Japan is faced with the conflicting problems of stimulating its domestic demand and reducing its external surplus. The best policy for Japan's domestic economy may not fit well with its international responsibilities. The U.S. should practice macroeconomic discipline and not leave the responsibility to others.

IN THE 1980s U.S.-Japan economic relationships have turned 180 degrees in global financial markets. Because the bulk of the huge increment in the U.S. current account deficit fell into Japan's external surplus and in turn Japan's extra savings financed a large part of the U.S. deficit, this new interdependence between external imbalances of the two economies has created hitherto-unknown sensitivities in economic relationships.

Financially, Japan has suddenly become the largest creditor nation in dollar terms, thanks to the rapid accumulation of large current account surpluses of the past several years; just and opposite has occurred for the key currency country, the United States. Changes in monetary policies and interest rates in Japan now strongly influences sentiments on Wall Street regarding American interest rates. stock prices, and the value of the dollar. This development reflects the fact that Japanese savings finance the bulk of the U.S. domestic budget and external deficits.

Such international finance by Japan takes the form not only of portfolio investment (bonds and stocks) but also of direct investment in factories and real estate. The latter form of overseas investment exports the Japanese style of management and technology as well as Japan's high price of land. Because these capital outflows are the counterpart of the current account surplus, the external imbalances tend to heat up trade conflicts between the two countries. The conflicts have arisen because of the alleged closed nature of Japanese markets and the strengthening of U.S. protectionism. It is ironic that the U.S. Trade Bill passed the Congress and was signed by President Reagan in August 1988, when the volume of U.S. exports had already risen by 20 percent per year during the past year or so. Retaliation by other countries to the actual applications of protectionist clauses in the Bill would be the worst impedement to such an export boom by the U.S.

International economic corporation or coordination has become ever more complex because of the historically unprecedented combination of the stunning rise of Japan's technological and financial power with the relative decline of the American economy, an economy, however, that still has the highest. GNP in the world and has the dominant currency as well.

This unique combination imposes an extremely difficult task in international coordination with respect to who initiates what leadership in which fields and who should exercise sanctions how in order to impose what disciplines on domestic economic management of the major countries, including the U.S. In the past, the key currency country was in a position to take the leadership and exercise sanctions, on the basis of its own disciplined domestic economic management and hence its own position as a stable, pivotal anchor in international financial markets.

Today, I cannot cover all the important issues just briefly touched above but I shall concentrate on a few basic issues. They will be: (1) the international management of the dollar problem in the 1980s; and (2) Japan's global responsibilities in the unique combination of the technological and financial rise of Japan and the relative decline of the U.S. as a net foreign debtor while remaining the world's leading industrial economy.


What kind of macroeconomic policies are required to achieve domestic and external equilibria simultaneously in the U.S. when its exports are booming? It is useful in answering this question if we understand how the problems associated with the adjustment process differ between 1987 and 1988.

In 1987, the international adjustment process to the large current account imbalances was featured by two events: the Louvre accord in February and the stock market crash in mid-October. The Louvre accord was the first time after the Plaza meeting that the U.S. agreed a further substantial dollar depreciation might not be desirable. A sharp decline of the dollar from the Plaza meeting toward the end of 1986 was accompanied, surprisingly, by lower interest rates and lower inflation rates in the U.S. due largely to a sharp decline of petroleum prices and the slack in the labor and the goods markets in the economy. Since early 1987, however, further lowering of the value of the dollar began to be accompanied by higher long-term interest rates and higher inflation rates, because previously favourable circumstances, both international and domestic, were fading away. Oil and other primary commodity prices were rising in SDR terms, and the rate of unemployment was quickly approaching 6 percent, i.e., toward the natural rate "zone of unemployment. The new circumstance forced U.S. authorities somewhat reluctantly to moderate the exchange rate policy adopted after the Plaza meeting.

However, the dollar tended to depreciate in the course of 1987; the U.S. trade account continued to deteriorate from $155 billion in 1986 to $170 billion in 1987 in spite of the beginning of an export boom. Markets became extremely sensitive to monthly trade figures, which were bound to be volatile. Whenever worse-than-expected trade deficits were published, the dollar came under strong downward pressure. The central banks intervened in the exchange market so heavily that they financed at least more than 35 percent of the current account deficit of the U.S. and around half of the surplus of Japan, according to the balance of payments figures. These figures, however, underestimate such interventions due to the possible placement of official dollar balances in forms other than the U.S. official liabilities.

In 1987, whenever the dollar declined, long-term interest rates were jacked up, ultimately to as high as 10.2 percent just before the stock market crash from 7.5 percent in early 1987. In the meantime, stock prices kept on rising; the Dow Jones Industrial Average increased from 1950 to 2650. The resultanting widened disparity between stock and bond yields was doomed to narrow and did so violently through a sharp decline of stock prices in the middle of October. In December, stock prices declined back to the levels of the early 1987.

In the financial turnmoils in 1987, a new U.S.-Japan financial interdependence developed. Given the size of U.S. financial markets relative to foreign markets and international financial flows, the substantial rise in long-term interest rates probably reflected primarily domestic forces, such as growing concern about a possible reacceleration of inflation. Nevertheless, external forces may have played a significant role, perhaps for the first time in recent history, as the current account deficit and hence the dependence of the U.S. on foreign funds, (particularly from Japan) reached a record size in absolute terms as well as in relation to the total size of U.S. financial markets.

As a result, foreign investors have been in a position to influence the yield curve of U.S. interest rates. When they are willing to buy U.S. long-term bonds, higher prices of such bonds, i.e., lower long-term interest rates, tend to result in a flatter yield curve. For instance, in 1985 and 1986 flattening of the yield curve coincided with exceptionally large net long-term capital inflows, particularly from Japanese financial institutions, which gained a position of unprecedented importance in U.S. bond markets. In 1987, however, these long-term capital inflows into U.S. bonds dwindled to less than a third of the size of such inflows in 1985 and 1986. In addition, as mentioned above, central banks intervened in the foreign exchange market to support the dollar through purchasing short-term liquid dollar assets. These initial developments may have cause long-term interest rates to become higher in relation to short-term rates, i.e., steepening the yield curve on dollar assets.

In sum, the sharp decline of the dollar after the Plaza meeting turned out to be a soft landing in 1986, because it was accompanied by lower interest rates and lower inflation. This soft landing was, however, folllowed by a bumpy landing of the dollar later in 1987, as indicated by declines of asset prices in three portfolio markets (dollars exchange, bonds and stocks). A fall of the dollar led to a decline in bond prices and then to a decline in stock prices.

International monetary coordination under the Louvre accord was suspected just before the crash. Although the relaxed monetary policies in the surplus economies were consistent with stabilizing the dollar around the current levels prevailing at the time of the Louvre agreement, Germany actually raised interest rates and Japan internally discussed whether to raise the official discount rate in view of the possible acceleration of inflation.

This change in monetary policy stance caused Mr. Baker to talk doen the dollar in a threatening tone against the Louvre agreement. The end of 1987 was marked by the pre-Christmas eve statement of the G-7 that further dollar depreciation would be counterproductive. At that time the value of the dollar was as low as at 120 yen and or DM 1.65 per dollar, compared with 150 yen and DM 1.75 per dollar about the time of the Louvre accord.

New features have coloured the year 1988. The new developments are: (1) the improvement of the U.S. trade account; and (2) the strong recovery of the Japanese economy.

In the first half of 1988, the trade deficit of the U.S. declined to an annual rate of $140 billion, i.e., about $30 billion smaller than that of 1987. The rate of increase in U.S. exports remained high, while demand for imports decelerated due to slower domestic demand and further dollar depreciation in the preceding periods. Owing to this turnaround of the trade deficit, the dollar hit bottom in early 1988. This stability of the dollar reduced expectations of exchange rate changes, which in turn contributed to a relatively smooth financing of current account imbalances in the first half of 1988 owing to increased private capital inflows into U.S. markets.

Corresponding to the export boom, business investment also has become increasingly stronger in the U.S. since the middle of 1987. It has become clear that the export and investment boom will be strong enough to support GNP growth along the path of full employment.

A risk now exists that, because the export and investment boom maintains full-employment GNP growth, such increased GNP or income tends to stimulate consumption and housing, leading the U.S. economy to overheating, unless either tighter fiscal or monetary policy offsets domestic demand expansion except for business investment. It is, therefore, natural that the overexpanded structural deficit of the U.S. budget should be reduced to release domestic resources for export and investment sectors in order to meet the required expenditure cut policy under the dollar depreciation and also prevent a possible overheating of the economy.

It has been argued many times that, if the U.S. reduces its budget deficit, further dollar depreciation will be needed for the U.S. to maintain full employment. The theory is that a reduction of the deficit should lead to less demand at home for U.S. products, which would have to be offset by an increase in net exports through a further depreciation of the dollar. As an abstract theory, it is correct. However, it ignores the time dimension or sequence that dollar depreciation has gone well ahead of the required domestic expenditure cut. In reality, therefore, just the opposite is the case. Now that the depreciation of the dollar thus far is risking excess demand for U.S. products due to the surge of exports and investment, this excess demand has to be offset by restraining domestic demand.

The best measure to cope with possible overheating in 1988 is to curtail the swollen budget deficit. A reduction in the deficit will prevent the economy from overheating. In turn, this step also should lead to an increase in domestic savings through a reduction of fiscal dissavings. Another result is a favorable decline in long-term interest rates. Furthermore, if the deficit could be reduced by reforms in the tax and social security systems that would dampen consumption and encourage savings, savings and investments would be brought more into balance in the U.S. In practice, however, the U.S. has been forced to resort to monetary tightening to restrain domestic demand because of its inability to act quickly on the fiscal front. The federal funds rate has increased since late spring, and the official discount rate was raised in August 1988.

This policy contains significant contradictions:

1. It is bound to push up interest rates, which

already are high. The current long-term interest

rate level of around 9.5 percent in the

U.S. is higher than its potential nominal GNP

growth trend of 6.5 percent. In contrast, in

Japan the long-term interest rate of 5.5 percent

or so is in balance with the potential nominal

GNP growth trend. These high interest

rates have a negative impact on developing

nation's debt problem. They also delay capital

investment, essential to improve productivity

and international competitiveness of the U.S.

2. U.S. interest rate increases may spur competitive

worldwide increases in interest rates.

Compared with the fixed exchange rate system,

monetary tightening under the floating

exchange rate regime tends to generate a

stronger effect, as it contrasts the money supply

and pushes up a currency's value. The

result is an export of inflation, forcing other

countries to tighten credit more than may be

warranted by their own domestic economic


3. Another contradiction is the appreciation of

the dollar. Its value has risen because of interest

rate increases exactly when foreign exchange

risk is declining due to improvement

in the U.S. trade deficit. In fact, given the

need for further improvements in international

payments imbalances, the dollar's appreciation

should be viewed premature and cannot

be justified yet.



The issue has been low the surplus economies can handle potentially deflationary consequences of the adjustment of international imbalances. If the depreciation of the dollar is to achieve external and domestic equilibrium simultaneously, it must be accompanied by restraints in domestics demand in the U.S. The complications of this iron law of economies, however, would be a deflationary impact on the surplus economies, due either to their currency appreciation as a counterpart of the dollar depreciation or to curtailed U.S. domestic demand or a combination of the both.

During the past three years the issue has gone deeper for Japan, because

Japan's global responsibilities have been highlighted, reflecting its position as the country with the second largest GNP and with rising technological and financial power. It is often claimed that the large creditor countries should be sufficiently farsighted to sacrifice shortrun domestic objectives unilaterally in the interest of long-run international stability. Putting the issue more precisely, what responsibility should Japan assume when policies appropriate for the maintenance of systemic stability conflict with domestic objectives? This pressing issues is even more complicated today. Because international stability is most strongly influenced by the world's leading industrial economy with the dominant key currency status, should Japan divert from policies that are optimal for its domestic economy for the purpose of international policy coordination, which is aimed at alleviating international turbulance caused essentially by the largest economy?

In order more concretely to address this question, it is useful to explain what mechanisms have worked for generating strong domestic demand under the yen appreciation and for reducing its external surplus. Are they sustainable?

Nature of Strong Domestic Demand

In three successive quarters up to January-March 1988, domestic demand grew on average by 10 percent per annum and GNP by 9 percent in real terms. The difference was net exports, which declined and dragged down the growth of GNP by about 1 percent point. The April-June quarter 1988 registered a pause in growth, but there are indications that domestic demand and GNP will grow in the following quarters by about 5 percent and 6 percent per annum, respectively. This performance is far better than in 1986, when the yen appreciation hit the economy and the growth rate slowed to only 2.5 percent.

What accounts for this performance? Two categories of demand were important: policy-supported and autonomous.

Both monetary and fiscal policies were relaxed in 1987 and 1988 in line with the Louvre accord. The aggregate money supply (M2 + certificates of deposit) accelerated to 11 to 12 percent per annum, substantially exceeding the medium-term orientation of its 8 to 9 percent increase by the Bank of Japan. A program for fiscal stimuli was announced by the government at the end of May 1987. The core of the program was an increase in public works expenditures, amounting to approximately 1.5 percent of GNP.

The policy mix worked successfully. Helped by low interest rates and by an increase in interest-subsidy loans extended by the government Housing Finance Corporation, residential construction increased by 20 percent in 1987. New housing starts amounted to 1.7 million units, even greater than those in the U.S., where the population is twice as large as in Japan. Furthermore, on a national account basis, government fixed capital formation increased by 15 percent in FY 1987 (ending March 1988), in spite of the suspicion that the bulk of such an increase in public expenditure would be absorbed into procurement cost of expensive land with little stimulating effects on domestic demand. The housing boom together with public works expenditure contributed to an increase in real GNP by 3 percent in 1987.

However, the policy-supported demand was not large enough to account fully for the stronger-than-expected domestic demand mentioned earlier. Autonomous private demand was another important key, particularly in the areas of business investment in manufacturing and consumer demand for durable goods.

The private sector in manufacturing needed some time to make industrial adjustments to both rapid appreciation and new high levels of the exchange rate through deploying capital and labor and technological innovations. In the first half of 1988, the effective (trade-weighted) exchange rate of the yen in real terms was about 40 percent stronger than the 1980-82 average, while that of the U.S. dollar was weaker by about 15 percent.

Manufacturing investment bottomed out in the middle of 1987, having declined by 8 percent from the peak in July-September 1985. Manufacturing investment began to increase in the second half of 1987, first led by domestic demand-based industries such as petrochemicals, paper and pulp, and food processing. Then, in the first half of 1988, even export-oriented manufacturing investment began to increase, thanks to the surge of domestic demand in the face of export declines and import increases of the same categories of products. In particular, export-oriented industries, such as general machinery, electric and electronic machinery, and precision instruments and automobiles, are projected to increase fixed business investment substantially in FY 1988.

Because nonmanufacturing business investment has remained robust in the expansion, led by banking and insurance, telecommunications, construction, transportation and the leasing industry, total business investment will increase by nearly 20 percent in 1988. The most important motivation for such business investment expansion is rationalization and productivity improvement by introducing office automation and information technologies.

Business investment in R&D (not counted in business fixed capital formation) has recently exceeded business investment in machinery and equipment in major Japanese manufacturing companies. The recent growth in R&D investment is presumably attributed to increased investment in long-term research, seen in the rapid establishment of new basic research laboratories, and in the rapid diversification of business areas away from traditional mainstays. The ratio of R&D investment (nondefense) to GNP in Japan constantly surpassed that of the U.S. throughout the 1980s, approaching close to 4 percent in very recent years.

A second strong autonomous increase in private demand has been for consumer durable goods. Since the middle of 1987, consumer demand for durable goods as a whole increased by 15 percent per annum, covering both traditional consumer durable goods (refrigerators, washing machines, vacuum cleaners, automobiles, etc.) and new products (small portable liquid crystal colored TV sets, multilingual TV sets, compact disk players, and Japanese language word processors).

Here is one of the important reasons why the hitherto export-oriented industries have managed to survive drastic yen appreciation in a relatively short time span. Consumption demand previously concentrated on the most export-dependent products, such as these consumer durable goods, helping the industries to shift toward domestic markets away from export markets. Such domestic demand is, in turn, strongly supported by innovations through which the quality of traditional consumer durable goods has been considerably improved and new attractive products have been introduced to markets at reasonable prices. For examples, it was not until 1986 that word processors that can operate in the Japanese language became marketable. It had been difficult technologically to convert the binary yes-no system into a word processing program that can produce complicated Japanese characters, not the English alphabet. At the same time, semiconductors became available at much lower prices for producing word processors. Virtually no households possessed Japanese language word processors in 1986, but the diffusion rate suddenly jumped to 14 percent of total households of about 40 million at the end of 1987, soon exceeding one-fourth of total households.

The basic factors at work for reducing the external surplus have been exchange rate appreciation and the high growth of domestic demand. While the volume of total exports stopped increasing after the last quarter of 1985 and remained virtually flat until April-June 1988, the volume of total imports increased by 40 percent during the same period. In particular, the volume of imports of manufactured goods jumped by 80 percent, reflecting both the high income elasticity of such imports of about two and the enchanced international price competitiveness of Japan's trading partners, especially Asian NIES. The import share in domestic demand for less-sophisticated consumer durables such as radio cassettes, cameras, and simply VTRs increased 30 to 50 percent in 1987 from about 10 to 20 percent only two years earlier.

Correspondingly, the current account surplus declined to an annual rate of $81 billion in the first half of 1988 from a peak of $94 billion in the second half of 1986. The ratio of the current account surplus to GNP declined to 2.9 percent in the first half of 1988, compared with a peak of 4.6 percent in the second half of 1986.

Two outcomes are clear. One is that the share of import value of manufactured goods grew to account for nearly 50 percent of total import value, compared with the recent ten-year average of only about 24 percent (1973-82). This share is still low compared with that of advanced economies ranging at about 75-80 percent, but such a hike in imports of manufactured goods in such a short period has renewed the question of the nature of the allegedly closed market of Japan.

Because it is well known that the average tariff rate in Japan is among the lowest, nontariff barriers are alleged to be responsible for the close market. In view of the rapid penetration of foreign manufactured products into Japan, however, the nature of the protection measures could be characterized as of the tariff rather than nontariff type, because foreign products could not have penetrated into Japan's domestic markets by simply enhancing price competitiveness if barriers had been like import quotas.

The other outstanding feature of the recent outcome of Japan's external account lies in the growing possibility that Japan's current account surplus to GNP ratio can be reduced toward more sustainable levels of less than 2 percent in a few years. As recently as in early 1987, few people believed that such a possibility existed. However, it is now widely projected by the IMF and OECD that the ratio will decline close to 2.5 percent in 1988.

Corresponding to a decline of the X-M/GNP ratio from 4.6 percent to 2.9 percent during the period between the second half of 1986 and the first half of 1988, housing construction, private business investment and public capital formation all contributed to raising the domestic investment I/GNP ratio and hence reduce the S-I/GNP ratio, rather than through lowering domestic savings.

Furthermore, a great challenge for the surplus economies has been whether or not it would be possible to unwind the external surplus (X-M) without increasing government deficits very much. During the past two years, the reduction of X-M in Japan has corresponded to the reduction of S-I through larger housing construction and business investment rather than by larger fiscal deficits discussed above.

However, if relaxed monetary and fiscal policies cannot be mobilized every year for reducing the surplus of S-I, what instruments can be available for this purpose in Japan?

To sustain the present momemtum of domestic demand, structural reforms are all the more important. According to OECD calculations, the purchasing power parity for the Japanese economy as a whole is on the order of 220 yen per U.S. dollar, which is much weaker than the underlying equilibrium exchange rate for Japanese manufacturing as well as today's actual rate of around 10 yen per dollar.

The large gap between the two equilibrium exchange rates should reflect much lower productivity in nonmanufacturing than in manufacturing and hence much higher prices and charges in the former than in the letter. Nonmanufacturing, which accounts for two-thirds of total value added in the economy, covers not only agriculture but also distribution, transportation, construction, communications, education, insurance, banking and so on. The Mayekawa Report and the new plan can be interpreted as an attempt to reduce the gap in purchasing power between the externally strong yen and the internally weak yen through deregulations and liberalizations, which should induce more competition and make the nonmanufacturing sector more rationalized and efficient. Land policies also are to be designed for more efficient use of limited land in large metropolitan areas. So far, structural "changes" have registered more clearly in the manufacturing sector, thanks to the strong yen. What is rally needed is structural "reform" in nonmanufacturing, through which the domestic purchasing power of the yen should be enhanced, resulting in higher living standards together with stronger domestic demand.


The imbalances/GNP ratio has declined by 1.5 percentage points for Japan and less than 1 percentage point for the U.S. during the past two years. Such reduction of imbalances has been accompanied so far neither serious inflationary nor deflationary consequences for the U.S. and Japan, respectively.

However, the adjustment has not advanced without financial turmoil. What has become increasingly clear is that it is not an absolute nominal amount of the imbalances or the absolute size of the net external liabilities of the U.S., but the adjustment process of the international payments imbalances that will importantly determine the fate of the dollar and hence the world economy. If the adjustment process results neither in increasingly higher long-term interest rates nor in higher inflation expectations, the steady decline in the U.S. external deficit, through preventing an explosion of the external debt/GNP ratio, should avoid a hard landing of the dollar.

The core elements responsible for stabilizing financial markets are: (1) steadily lower external deficit/GNP ratio, together with gradual declines in the absolute nominal value of the deficits; (2) lowering of dollar long-term interest rates compared with the underlying growth rate of nominal GNP in the U.S.; and (3) control over general domestic inflation in the face of the export and investment boom or of a further dollar depreciation. The first two conditions can prevent an explosion of the external debt/GNP ratio beyond certain levels, as is well known in economics in terms of Dormar's equations. The last condition is critical for maintaining public confidence in the stable value of the dollar. At present, all these conditions can be best met by fiscal consolidation in the U.S.

In other words, the problem that the U.S. at present faces is a classic balance of payments problem, in the following two senses. First, the U.S. economy is at full employment or in the natural rate "zone" of unemployment. Second, the U.S. current account deficit will not be financed by a sustainable inflow of foreign private capital unless macroeconomic policies are put in order and the current account deficit steadily declines. In 1987 the triple declines in the three asset prices, i.e., dollar exchange, bonds, and stocks, and the bumpy landing of the dollar indicated that market forces would violently enforce the needed adjustment for external and internal disequilibria unless macroeconomic policies were disciplined to attain both equilibria simultaneously.

Massive official intervention in the exchange market such as in 1987 could be interpreted as a signal that private capital inflows into the U.S. dried up and that the adjustment failed to cope with a classic balance of payments crisis. In 1988, however, the improvement of the U.S. trade deficit has stabilized the dollar and hence reduced short-run exchange risks. Private capital inflows into the U.S. have come back voluntarily to finance its declining deficits in relation to GNP.

The deflationary impact of the sharp appreciation of the yen has been overcome by stimulative Keynesian policies with no inflationary consequences, but more importantly by flexible responses of Japanese manufacturers to the yen appreciation through innovations. The resultant buoyant domestic demand supported strongly by innovations has considerably eased the possible conflict between Japan's global responsibilities for international stability and medium-term-oriented optimal policies for Japan's domestic economy.

The international adjustment has come just half way. Whether or not another half to complete the adjustment may face financial problems depends greatly upon the credible implementation of the policy prescriptions suggested in the text. In particular, the fiscal consolidation in the U.S. and the structural reforms together with the medium-term orientation of macroeconomic policies in Japan should hold the most important keys.

In very recent years international macroeconomic coordination has entered a new era. Historically, creditor countries played a leading role in determining their own interest rates so that their monetary policies influenced the stability of international capital markets. For the first time, the country that still holds the position of the leading global financial market also has become a net foreign debtor. It is true that the U.S. will still continue to exercise an important influence on the determination of interest rates worldwide for the foreseeable future, because of its sheer size of the economy in real as well as financial terms. However, Japan's capital movements and monetary policy also are now in a position of influence the value of the dollar and hence dollar interest rates and stock prices in Wall Street. This new combination of Japan's rise as the leading creditor nation with the relative fall of the still dominant key currency country into a large debtor nation has complicated the nature of Japan's global responsibilities. Japan's policy that is optimal for its own domestic economy may not be optimal for international financial stability. This conflict tends to arise when Japan as the world's second largest economy has to assume global responsibilities for stabilizing the world economy, without well-developed, institutionalized international arrangements whereby macroeconomics disciplines could be imposed on major economies, including the world's largest economy. This is the biggest challenge that both nations must respond to constructively.

* Masaru Yoshitomi is Director General, Economic Research Institute, Economic Planning Agency, Government of Japan. This paper was presented at the 30th Annual Meeting of NABE, September 25-28, 1988, in Pittsburgh PA.
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Author:Yoshitomi, Masaru
Publication:Business Economics
Date:Jan 1, 1989
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