Between 2010 and 2012, former Bank of Japan Governor Shirakawa argued, in series of speeches, that Japan’s economic performance, when compared to that of other G7 nations, was stronger after 1990 than appreciated by the critics. In May 2012, Nobel prize-winning economist and Princeton University professor Paul Krugman echoed a similar sentiment in a Financial Times interview. This analysis expands on these assertions and asks to what extent they are supported by cross-section data for the G7. As reviewed below, to date, no idiosyncratic explanation has arisen to explain the Japanese slowdown—perhaps this is the correct explanation: the slowdown in Japan, once adjusted for demographics, is less severe than in other G7 countries and, as recently noted by Eichengreen, Park, and Shin (2015), TFP growth in a number of other nations followed similar patterns. Focused on labor productivity, far from a laggard, Japan’s performance ranks near the best in the G7.

1. Introduction
2. Background: Events and Monetary Policy during the 1980s and 1990s
3. Banking Paralysis Delayed Growth
4. The Successful Monetary Policy Fight against Stagnation
5. Japan and the G7: Long-Term Trends 1981-2012
6. Japan and the G7: A Comparison across Financial Crisis
8. Thoughts on Japan’s Success Relative to the Its Critics
9. Conclusions
References

• Richard G. Anderson(Senior Research Fellow, School of Business and Entrepreneurship, Lindenwood University)