Hit by a devastating housing slump, billions of dollars of subprime losses and rising oil prices, the U.S. economy appears headed for recession, taking Japan down with it. It's a situation tailor-made for economists to prove their mettle, but will they rise to the challenge?
Only time will tell, but they might stand a chance if they heed the advice of Nomura Research Institute's chief economist Richard C. Koo in his latest book, "The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession." Following up from his groundbreaking 2003 work, "Balance Sheet Recession," Koo shows how fiscal stimulus — primarily government spending — can help prevent economies from falling into the type of deflationary trap Japan endured in the 1990s.
Readers who like their economics light and frothy should stick to works like the best-selling "Freakonomics" (Levitt & Dubner, 2005). For this self-admitted "quasi-academic book" by the awarded American economist is written more for a business audience than for lay readers, and contains its fair share of jargon.