Government deficits are accelerating deindustrialization in the United States. Should we care? Absolutely. One reason is that manufacturing and associated learning-by-doing are powerful sources of external benefits that accelerate economy-wide productivity growth. A second is that the loss of...

Japan's macroeconomic problem has yet to be properly diagnosed. Throughout the 1990s, policy makers could not decide on the proper macro economic measures to combat the country's severe economic slump. We propose a unified explanation, with deep historical roots, of why aggregate private demand...

Japan's interest rates have been compressed toward zero because of pressure coming through the foreign exchanges. Twenty years of current-account surpluses have led to a huge buildup of claims - mainly dollars - on foreigners. Because of ongoing fluctuations in the yen/dollar exchange rate,...

China's financial conundrum arises from two sources. First, its large saving (trade) surplus results in a currency mismatch because it is an immature creditor that cannot lend in its own currency. Instead, foreign currency claims (largely US dollars) build up within domestic financial...