Japan's Deflationary Hangover: Wage Stagnation and the Syndrome of the Ever-Weaker Yen
 Japan still suffers a deflationary hangover from the great episodic yen appreciations of the 1980s into the mid-1990s. Money wages are still declining, and short-term interest rates remain trapped near zero. As the yen becomes weaker in real terms due to prices and wages growing faster in Europe and the United States than in Japan, American and European industrialists and politicians are again complaining that the yen is too weak.
Holding that those who do not learn from history are condemned to repeat it, this paper examines the historical roots of Japan's continuing macroeconomic fragility, resulting in today's syndrome of the ever-weaker yen. The insights gained are pertinent not only for Japan, but also for the People's Republic of China, which is under greater pressure than Japan to appreciate its currency.
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