Skip to main content
SpringerLink
Log in
Book cover

Learning from the World pp 26–50Cite as

Palgrave Macmillan

A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries1

  • Chapter

  • 109 Accesses

Abstract

In the early 1990s, many people had drawn a lesson from the previous decade: Japan’s variant of capitalism was the best model. Other countries around the world should and would follow it. Japan’s admired institutions included relationship banking, keiretsu, bonus compensation for workers, lifetime employment, consensus building, strategic trade policy, administrative guidance, pro-saving policies, and maximization of companies’ industrial capacity or market share. These features were viewed as elements of Japanese economic success that were potentially worthy of emulation. The Japanese model quickly lost its luster in the 1990s, however, when the stock market and real estate market crashed, followed by many years of severe stagnation in the real economy.2

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   54.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Alesina, Alberto, Filipe Campante, and Guido Tabellini (2008), “Why is fiscal policy often procyclical?” Journal of the European Economic Association, 6(5) (September), 1006–1036.

    Article  Google Scholar 

  • Alesina, Alberto, and Roberto Perotti (1996), “Fiscal discipline and the budget process,” American Economic Review, 86(2), Papers and Proceedings (May), 401–407.

    Google Scholar 

  • Ashiya, Mashahiro (2007), “Forecast accuracy of the Japanese government: its year-ahead GDP forecast is too optimistic,” Japan and the World Economy, 19(1) (January), 68–85.

    Article  Google Scholar 

  • Auerbach, Alan (1994), “The U.S. fiscal problem: where we are, how we got here and where we’re going”, in: NBER Macroeconomics Annual 1994, vol. 9, 141–186. NBER Working Paper 4709.

    Article  Google Scholar 

  • Auerbach, Alan (1999), “On the performance and use of government revenue forecasts,” National Tax Journal, 52(4), 765–782.

    Google Scholar 

  • Beetsma, Roel, Massimo Giuliodori, and Peter Wierts (2009), “Planning to cheat: EU fiscal policy in real time,” Economic Policy, 24(60), 753–804.

    Article  Google Scholar 

  • Brück, Tilman, and Andreas Stephan (2006), “Do Eurozone countries cheat with their budget deficit forecasts?” Kyklos, 59(1) (February), 3–15.

    Article  Google Scholar 

  • Calderón, César, and Klaus Schmidt-Hebbel (2003), “Macroeconomic policies and performance in Latin America,” Journal of International Money and Finance, 22(7) (December), 895–923.

    Article  Google Scholar 

  • Feldstein, Martin (1994), “American economic policy in the 1980s: a personal view,” in: Feldstein, ed., American Economic Policy in the 1980s (Chicago: University of Chicago Press), 1–79.

    Chapter  Google Scholar 

  • Fernald, Lia, Paul Gertler, and Lynnette Neufeld (2008), “Role of cash in Conditional Cash Transfer programmes for child health, growth, and development: an analysis of Mexico’s Oportunidades,” Lancet, vol. 371 (March 8), 828–837.

    Article  Google Scholar 

  • Fingleton, Eamonn (1995), Blindside: Why Japan Is Still on Track to Overtake the U.S. By the Year 2000 (Boston, MA: Houghton Mifflin).

    Google Scholar 

  • Forni, L., and S. Momigliano (2004), “Cyclical sensitivity of fiscal policies based on real-time data”, Economic Research Department, Temi di discussione (Economic working papers) 540, Bank of Italy.

    Google Scholar 

  • Frankel, Jeffrey (1993), “The evolving Japanese financial system, and the cost of capital,” in: Ingo Walter and Takato Hiraki, eds, Restructuring Japan’s Financial Markets (Irwin Press and New York University), 235–285.

    Google Scholar 

  • Frankel, Jeffrey (1993), “The evolving Japanese financial system, and the cost of capital,” in: Ingo Walter and Takato Hiraki, eds, Restructuring Japan’s Financial Markets (Irwin Press and New York University), 235–285.

    Google Scholar 

  • Frankel, Jeffrey (2001), “Economic advantages of America,” Europa und USA im Spannungsfled von Wirtschaft und Politik, Schloss Schönbrunn, Vienna, 16 May. http://www.hks.harvard.edu/fs/jfrankel/ViennaUSrev523.pdf.

  • Frankel, Jeffrey (2003), Republican and Democratic presidents have switched economic policies,” Milken Institute Review, 5/1, 18–25.

    Google Scholar 

  • Frankel, Jeffrey (2008), “Snake-oil tax cuts,“ Briefing Paper 221, Economic Policy Institute.

    Google Scholar 

  • Frankel, Jeffrey (2010), “Mauritius: African success story,” in: Sebastian Edwards, Simon Johnson, and David Weil, eds, African Successes (forthcoming).

    Google Scholar 

  • Frankel, Jeffrey (2013), “A solution to fiscal procyclicality: the structural budget institutions pioneered by Chile,” in: Luis Felipe Céspedes and Jordi Galí, eds, Fiscal Policy and Macroeconomic Performance, Series on Central Banking, Analysis, and Economic Policies, Central Bank of Chile Working Paper 604 or Harvard Center for International Development Working Paper 216. 14th Annual Conference of the Central Bank of Chile, 2010, Santiago.

    Google Scholar 

  • Frendreis, John, and Raymond Tatalovich (2000), “Accuracy and bias in macroeconomic forecasting by the administration, the CBO, and the Federal Reserve Board,” Polity, 32(4) (Summer), 623–632.

    Article  Google Scholar 

  • Gale, William, and Brennan Kelly (2004), “The ‘no new taxes’ pledge,” Tax Notes (July), 197–209, http://ssrn.com/abstract=565465.

    Google Scholar 

  • Gale, William, and Peter Orszag (2004), “Bush administration tax policy: revenue and budget effects,” Tax Analysts (October), 105–118, http://www.urban.org/ uploadedPDF/1000695_TaxBreak_100404.pdf.

  • Gavin, Michael, and Roberto Perotti (1997), “Fiscal policy in Latin America,” NBER Macroeconomics Annual, vol. 12, 11–61.

    Article  Google Scholar 

  • Goolsbee, Austan (1999), “Evidence on the high-income Laffer Curve from six decades of tax reform,” Brookings Papers on Economic Activity, no. 2.

    Google Scholar 

  • Heijman, W.J.M., and J.A.C. van Ophem (2005), “Willingness to pay tax: the curve revisited for 12 OECD countries,” The Journal of Socio-Economics, 34(5), 714–723 (Elsevier, Inc.).

    Article  Google Scholar 

  • Henríquez, Jesús Orozco (2006), “The Mexican system of electoral conflict resolution in comparative perspective,” Taiwan Journal of Democracy, 2(1), 51–60.

    Google Scholar 

  • Ilzetski, Ethan, and Carlos Vegh (2008), “Procyclical fiscal policy in developing countries: truth or fiction?” NBER Working Paper 14191.

    Google Scholar 

  • Johnson, Chalmers (1982), MITI and the Japanese Miracle (Palo Alto, CA: Stanford University Press).

    Google Scholar 

  • Johnson, Simon (2009), “The quiet coup,” The Atlantic Monthly, (May), 46–55, http://ww.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/.

  • Jonung, Lars, and Martin Larch (2006), “Improving fiscal policy in the EU: the case for independent forecasts,” Economic Policy, 21(47), 491–534.

    Article  Google Scholar 

  • Kaminsky, Graciela, Carmen Reinhart, and Carlos Vegh (2005), “When it rains, it pours: procyclical capital flows and macroeconomic policies,” NBER Macroeconomics Annual 2004, vol. 19, 11–82.

    Article  Google Scholar 

  • Marinheiro, Carlos (2010), “Fiscal sustainability and the accuracy of macroeconomic forecasts: do supranational forecasts rather than government forecasts make a difference?“ GEMF Working Papers 2010–07, Faculdade de Economia, Universidade de Coimbra, International Journal of Sustainable Economy (forthcoming).

    Google Scholar 

  • McNab, Robert M., Mark Rider, Kent Wall (2007), “Are errors in official US budget receipts forecasts just noise?“ Andrew Young School Research Paper Series Working Paper 07–22 (April).

    Google Scholar 

  • McNees, Stephen (1995), “An assessment of the ‘official’ economic forecasts,” New England Economic Review (July/August), 13–23, http://www.bos.frb.org/economic/neer/neer1995/neer495.pdf.

  • Medas, Paolo, and Daria Zakharova (2009), “Primer on fiscal analysis in oil-producing countries,” IMF Working Paper 56 (March).

    Google Scholar 

  • Mendoza, Enrique G., and P. Marcelo Oviedo (2006), “Fiscal policy and macroeconomic uncertainty in developing countries: the tale of the tormented insurer,” NBER Working Paper 12586 (October).

    Google Scholar 

  • Neut, Alejandro, and Andres Velasco (2003), “Tough policies, incredible policies?“ NBER Working Paper 9932 (September).

    Google Scholar 

  • Niskanen, William (2002), “Comment,” in: Jeffrey Frankel and Peter Orszag, eds, American Economic Policy in the 1990s (Cambridge, MA: MIT Press), 184–187.

    Google Scholar 

  • Niskanen, William (2004), “Starve the Beast does not work, Cato Policy Report, 26(2) (March–April).

    Google Scholar 

  • Niskanen, William (2004), “Starve the Beast does not work, Cato Policy Report, 26(2) (March–April).

    Google Scholar 

  • Niskanen, William (2006), “Limiting government: the failure of ‘Starve the Beast’,” Cato Journal, 26/3, 553–558.

    Google Scholar 

  • Perry, Guillermo (2003), “Can fiscal rules help reduce macroeconomic volatility in the Latin America and Caribbean region?” World Bank Policy Research Working Paper 3080.

    Google Scholar 

  • Rajan, Raghuram (2005), “Has financial development made the world riskier?” Proceedings, Federal Reserve Bank of Kansas City (August), 313–369.

    Google Scholar 

  • Rawlings, Laura, and Gloria Rubio (2005), “Evaluating the impact of conditional cash transfer programs,” World Bank Research Observer, 20/1, 29–55, http://elibrary.worldbank.org/docserver/download/15646971–20-1–29-56.pdf?expires=1372789225&id=id&accname=ic_cid-57015271&checksum=619C9E4A201ABB7DD0AAADA33C6FA5FF.

  • Reinhart, Carmen, and Vincent Reinhart (2009), “Capital flow bonanzas: an encompassing view of the past and present,” in: J. Frankel and C. Pissarides, eds, NBER International Seminar in Macroeconomics 2008 (Chicago: University of Chicago Press).

    Google Scholar 

  • Reinhart, Carmen, and Kenneth Rogoff (2009), This Time is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press).

    Google Scholar 

  • Romer, Christina, and David Romer (2007), “Do tax cuts Starve the Beast: the effect of tax changes on government spending,” NBER Working Paper 13548.

    Google Scholar 

  • Stockman, David (1986), The Triumph of Politics: Why the Reagan Revolution Failed (New York: Harper and Row).

    Google Scholar 

  • Strauch, Rolf; Mark Hallerberg, and Jürgen von Hagen (2009), “How forms of fiscal governance affect fiscal performance,” in: M. Hallerberg, R. Strauch, and J. von Hagen, eds, Fiscal Governance in Europe (Cambridge: Cambridge University Press). Revised version of Von Hagen, Hallerberg, and Strauch (2004), “Budgetary forecasts in Europe— the track record of stability and convergence programmes,” ECB Working Paper 30.

    Google Scholar 

  • Talvi, Ernesto, and Carlos Vegh (2005), “Tax base variability and procyclicality of fiscal policy,” Journal of Development Economics, 78(1), 156–190.

    Article  Google Scholar 

  • Tornell, Aaron, and Philip Lane (1999), “The voracity effect,” American Economic Review, 89(1) (March), 22–46.

    Article  Google Scholar 

  • Trabandt, Mathias, and Harald Uhlig (2010), “How far are we from the slippery slope? the Laffer Curve revisited,” ECB Working Paper 1174. http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1174.pdf. NBER Working Paper 15343 (2009), http://www.nber.org/papers/w15343.pdf. CEPR DP 5657 (2006), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=920927##.

  • Vogel, Ezra (1979), Japan as Number One: Lessons for America (Cambridge, MA: HarvardUniversity Press).

    Book  Google Scholar 

  • Von Hagen, Jürgen, Ludger Schuknecht and Guido Wolswijk (2009), “Government bondrisk premiums in the EU revisited: the Impact of the financial crisis.” CEPR Discussion Papers 7499.

    Google Scholar 

  • Von Hagen, Jürgen, and Ian Harden (1995), “Budget processes and commitment to fiscal discipline,” European Economic Review, 39(3–4) (April), 771–779.

    Article  Google Scholar 

  • Wyplosz, Charles (2005), “Fiscal policy: institutions versus rules,” National Institute Economic Review. Also CEPR Discussion Papers 3238.

    Google Scholar 

Download references

Authors
  1. Jeffrey Frankel
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Joe Colombano Aniket Shah

Copyright information

© 2014 Jeffrey Frankel

About this chapter

Cite this chapter

Frankel, J. (2014). A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries1 . In: Colombano, J., Shah, A. (eds) Learning from the World. Palgrave Macmillan, London. https://doi.org/10.1057/9781137372130_3

Download citation

Publish with us

Policies and ethics

Search

Navigation