Juan M. Sánchez
For years, perhaps even decades, Japan’s economy has struggled with low growth and low inflation. A year ago, new policies were put into place to turn around the economy. Although there are similarities between Japan’s experience and that of other developed countries (including the U.S.), there are also many differences.
During the last global recession, house prices fell in some European countries almost as much as in some U.S. states. However, mortgage defaults occurred at a much lower rate in Europe. The authors say the difference might be explained by two regulations that apply in Europe but are used on a limited or much less restrictive basis in the U.S.
U.S. corporations are holding record-high amounts of cash. One reason has to do with taxes—both the uncertainty about future taxes and the reality of today’s tax rules. The second reason has to do with the rise of research and development; because of its uncertain nature, this sort of work requires access to high levels of cash.
Conventional wisdom says that employment at small firms declines more than employment at large firms during recessions. However, that doesn’t seem to have been the case during the Great Recession of 2007-09.