Japan's Bubble, Deflation, and Long-Term Stagnation

An MIT Press volume of economists’ essays on the single most-cited cautionary tale in modern macroeconomics: Japan’s asset bubble of the late 1980s, the deflation that followed it, and the two decades of stagnation after that. It is an edited collection rather than a narrative — chapters take up monetary policy at the zero bound, the banking system’s bad-loan overhang, fiscal response, demographics and corporate governance — and the editors’ framing question is why an economy with competent institutions and enormous savings could not restart growth for twenty years.

Why it’s on the list: The technical case file behind every “are we Japan?” argument — what actually happened after the bubble, from the economists who studied it rather than the analogy-makers who invoke it.

Where I saw it: @tylercosgrove’s October 15, 2025 list of 25 books he offered to send to Jared Kushner.

Connections

• Bubble — the late-1980s asset bubble and what followed it.
• Zero Interest Rate Policy — Japan is the original case, and several chapters are about policy at the zero bound.
• Debt — the bad-loan overhang and the fiscal response.
• Banking — the banking system’s role in prolonging the stagnation.
• Economic History — the section of the corpus this belongs to.