The Holy Grail of Macroeconomics presents crucial lessons from Japan's recession that could aid the US and other economies as they struggle to recover from the current financial crisis. It accounts for Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures. The author developed the idea of yin and yang business cycles where the conventional world of profit maximization is the yang and the world of balance sheet recession, where companies are minimizing debt, is the yin.
Praise for The Holy Grail of Macroeconomics
"There will probably never be a last word on the Japanese financial catastrophe of the 1990s but Richard Koo's book may be the most significant analysis ever published. Agree or disagree, any analyst of the current United States situation must consider Koo's arguments."
"Richard Koo does it again. By presenting a unique theory regarding the Great Depression and Japan's recession of the last 15 years, Koo offers a new understanding of current problems in the U.S. and other economies. With many pearls of analytical wisdom, The Holy Grail of Macroeconomics: Lessons from Japan's Great recession is a must-read for economists, policymakers and individual investors alike."
"Richard Koo's pioneering work on balance-sheet recession has been invaluable in understanding the difficulty faced by Japan's economy and monetary authorities during the past 15 years. In this book, he has shown that the U.S. Great Depression was also driven by the same balance sheet concerns of the private sector, indicating that this kind of recession can happen to any post-bubble economy. I sincerely hope that the lessons contained in this book are put to good use in fighting similar recessions elsewhere, including the U.S. subprime crisis."
"The Holy Grail of Macroeconomics presents a brilliant and original framework for understanding―and overcoming―a post-bubble economic crisis such as the one the world faces today. By discrediting the conventional view that monetary policy is effective in combating a post-bubble recession, Richard Koo has made an invaluable contribution to economic theory and at just the right time."