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The Politics of Financial Crisis Response in Japan and the United States

Published online by Cambridge University Press:  13 August 2013

PHILLIP Y. LIPSCY  and
HIROFUMI TAKINAMI
PHILLIP Y. LIPSCY
Affiliation:
Assistant Professor of Political Science at Stanford University and the Thomas Rohlen Center Fellow at the Shorenstein Asia Pacific Research [email protected]
HIROFUMI TAKINAMI
Affiliation:
Former Visiting Fellow, the Shorenstein Asia Pacific Research Center, Stanford University and Former Visiting Scholar, Policy Research Institute, Ministry of Finance, [email protected]
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Abstract

We examine the politics of financial crisis response in Japan and the United States. Many existing accounts of Japan's ‘lost decade’ of the 1990s have emphasized Japan-specific factors, such as structural problems, policy errors, and political dysfunction. We argue that Japan may have been subject to a form of first-mover disadvantage. Like innovation in the private sector, developing effective solutions to novel policy problems requires a messy process of discovery, experimentation, and repeated failure. Much as late-industrializing countries adapted the methods and technologies of early developers, second-movers can apply effective policies demonstrated by first-movers in a more targeted, efficient, and rapid manner. We show that the behavior of Japan and the United States during their respective financial crises is broadly consistent with this theory. In addition, policy adoption in the United States most clearly reflected lessons from Japan in areas where the lessons were considered clear and implementation was less politicized.

Type
Research Article
Information
Japanese Journal of Political Science , Volume 14 , Issue 3 , September 2013 , pp. 321 - 353
Copyright
Copyright © Cambridge University Press 2013 

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