The Japanese Economy: Trade, Industry, and Government
The Japanese Economy: Trade, Industry, and Government (ISBN: 9780860084693) was written by Ryutaro Komiya, published by University of Tokyo Press in 1990. Komiya was the first director of MITI's Research Institute.
Notes from Chapter 8: Oil Crisis Policy.
The first oil shock came at the end of an expansionary period.
- Abandonment of Bretton Woods system in 1971 allowed business cycle to heat up.
- Rapid response was hiking reserve ratios.
- Delayed response was hiking discount rate from 7% to 9%
- prices were up 25%; wages were up 33% in 1974
- rapid inflation created low expectations for economic outlook
- tight monetary policy was enacted leading to 20% fall in production; did not return to level until 1978
- 1976 Spring Offensive set wage rates into deflation
By the coming of the second oil shock, investment had begun to shift into industries not susceptible to energy crises.
Also, saw investment into overstocking in anticipation of further shocks, which slowed recovery and reduced the availability of financing for consumers.
- Inflation peaked at 24%; at 73% for raw materials in 1980
- Due to overstocking and milder expectations, production quickly recovered within a quarter