Morning Must-Read: Paul Krugman: Shinzo and the Invisibles
Morning Must-Read: David Beckworth: Monday Money Matters Roundup

Morning Must-Read: Matthew Klein: Did Japan Actually Lose Any Decades?

Matthew Klein: Did Japan actually lose any decades?: "After adjusting for population, real household spending...

...grew more from 1990-2013 in Japan than in every country in our sample except for Sweden, the UK, and US. Moreover, the UK and US only managed to pull off their superior consumption growth with the help of huge unsustainable debt bubbles and ‘wealth effects’, while Japanese consumers had to contend with sinking asset markets and stagnant nominal wages. So much for the idea that deflation kills the impulse to shop! If we start the clock not in 1990, however, but in 2000, Japan looks even better.... Now, one could argue that some of this is as much a reflection on the severity (and mishandling) of the aftermath of the excesses in other countries as much as it is a testament to the strength of Japan. But even if we use the cherry-picked time frame of 1990-2007, real consumption per person still grew more in Japan than in Germany and Switzerland, and almost as much as in France and Austria...

Falling in investment spending as a share of GDP and rising external debt are powerful factors boosting Japanese consumption growth relative to long-run sustainable paths. I read this mostly as an explanation for why the Japanese are not so unhappy with their lost decades then as a refutation of what I believe to be the true fact that Japan has lost decades.