Richard Koo, the world-renowned chief economist of Nomura Research Institute, discussed the lessons learned from Japan’s “lost decade” during a presentation at Center for Strategic and International Studies (CSIS). During his discussion, Koo suggested that government stimulus can play a key role in alleviating the problems of a balance sheet recession. Koo’s recent book, “The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession”, discusses these issues in greater detail.

Source: CSIS, October 29, 2009.

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Jason Clenfield and Norihiko Kosaka (Bloomberg): US risks Japan-like “lost decade” on stimulus exit, Koo says, October 23, 2009. US officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute. “This isn’t a cold, its more like pneumonia,” said Koo, author of “Balance Sheet Recession,” a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.”

• Brad DeLong (Caijing.com.cn): A moment too soon after the

div align=”justify”emCapt. Kirk: What would you say the odds are on our getting out of here? /em/divdiv align=”justify”emMr. Spock: It is difficult to be precise, Captain. I should say approximately 7824.7 to one. /em/divbr /div align=”justify”/divdiv align=”justify”Maybe we need the Star Trek crew in the US Treasury (certainly some of the recent hires look and talk like alien life forms). I’ve never been in the deflation/depression camp, and have consistently argued that the scale of monetary and fiscal stimulus, particularly in the US and UK, allied to the windfall real income gains from falling prices, would generate an economic rebound in 2010. In particular, I considered the speculative spike in energy costs last Summer as the critical tipping point that pushed a teetering US economy firmly into recession; at the time most economists recognized neither the nature of the mania in the oil market nor its destructive economic consequences. /divdiv …