Is there any data on "underemployment". Is there a way to factor into the employment figures those who have found jobs  as contract or temp employees with no long term guarantee of work and income, and with no benefits. Is this data available? If it is, what can it tell us about the economy?


Yours

Roger Reinoos

 




差出人: Todd Kreider <[log in to unmask]>
送信日時: 2015年6月26日 7:07
宛先: [log in to unmask]
件名: Re: [NBR's_Japan_Forum] What does a Japanese recession look like?
 

 
A few days ago libertarian macroconomist/blogger Scott Sumner wrote a post entitled, "Japan's 2014 tax increase worked; they should do it again". He surprised me by arguing Japan has not been in a recession since 2009 whereas I thought three quarters of negative growth strongly implied a recession. I do agree with him that two quarters of negative growth doesn't necessarily mean a recession, known as a "journalist recession." 

Sumner wrote: 

"In a first-best world I'd like to see the Japanese move toward the Singapore tax regime, which has much lower taxes that Japan. However, if the Japanese government insists on current levels of government spending, they really need to raise taxes. Not because they couldn't keep on the current track for many years---they could. Rather the problem is that if Japan keeps borrowing money and rapidly increasing the ratio of debt to GDP, then they will become more and more susceptible to an economic shock, like higher interest rates. Financial crises always seem far off, until they are suddenly upon you."

To this part I commented:

"In the case of Japan I'd say it is the opposite. There have been many predictions of Japan going into a financial crisis: Adam Posen insisted a crisis was around the corner in 2002. The finance minister insisted in 2010 that Japan faced a financial crisis by 2015. That year, Ken Rogoff thought Japan would be in a financial crisis by 2020. Takeo Hoshi wrote in 2014 that "Japan is defying gravity" and that without significant tax increases Japan will face a crisis by 2023.

2002 to 2023 is quite a range. As far as I know, no economist has successfully explained what debt ratio is not sustainable."


I added that the major error was assuming health care costs will keep climbing in Japan.


I also wrote: 


"Two bad quarters in a row is at least a case for recession. Was there also no recession in 2012 when unemployment was also falling, the stock market was rising and three quarters in a row were mildly negative?"


Sumner replied:


"That's right, the last Japanese recession was in 2008-9, if you look at a graph of the unemployment rate.


Yes, unemployment was falling before Abe took office, but it's now at a level lower than at any other time in the 21st century, even lower than at the peak of the 2007 boom. But obviously that doesn't prove Abe's policies caused that outcome, just that his policies certainly don't seem an obvious failure.


The growth since 2011 has averaged greater than 0%, as you say, [Sumner had written that journalists aren't aware that Japan's long term growth trend is 0%]   but that's not how one establishes the trend rate of growth. The trend rate is the RGDP growth rate over a substantial period where the unemployment rate is stable. And since unemployment has been falling since 2011, the recent growth rate has been above trend.


I completely agree with your comments that it's almost possible to predict financial crises, and I've never tried to do so. I make a much weaker claim; the larger the debt burden the greater the risk, that's all.


I happen to think there is more than a 50-50 chance that Japanese rates will stay low."


TK: 

I used just the past few years because I couldn't figure out where Sumner's 0% long term growth came from. Real GDP growth from 1991 to 2013 have been closer to 1%.  (I see 0.7% through 2010)  

I wrote a final comment that I understood Sumner's point about the importance of the unemployment rate (as do U.S. economists who decide when a recession  begins and ends using GDP and unemployment) but that I've never seen unemployment as the only guide. This is the flip side of some who ignored Japan's 5.5% high unemployment rate and subsequent steady drop in 2009 before and would only discuss GDP.

Todd Kreider


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