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In recent years, Japan's economy has gone from model of success to object lesson in failure. William W. Grimes offers a richly detailed insider's view of the key macroeconomic policies and events in contemporary Japan, as well as a close examination of the causes and effects of these upheavals. A new preface sets the book's findings in the context of the continuing intensification of Japan's financial woes. It is difficult to believe that the "Bubble Economy" of the late 1980s and the failed attempts at economic stimulation in the following decade both arose from the same policies. In Unmaking the Japanese Miracle, Grimes shows that this is precisely what happened. Focusing less on what went wrong than on why it went wrong, Grimes finds that mistaken macroeconomic policies-loose money in the late 1980s, excessively tight money until 1992, and only grudging use of expansionary fiscal policy until 1998-largely caused Japan's economic problems. Based on scores of interviews with Japanese policymakers, his is the first political explanation of why these catastrophic policies were carried out by the Ministry of Finance, the Bank of Japan, and the Diet. Various economic shocks were met, Grimes says, with a consistent and often inappropriate pattern of responses. This pattern has fundamentally altered because of changes within the three policymaking institutions since 1998

The global financial crisis of 2008-09 presented a critical challenge to East Asian regional financial cooperation. Over a decade of efforts to reduce regional vulnerability to financial crisis and contagion were confronted with the worst global economic crisis since the 1930s. The results for East Asia were mixed. On the one hand, no economies were forced to submit to IMF-led bailouts, as had happened so painfully in 1997-98. On the other hand, the most highly-developed component of the project of ASEAN+3 financial regionalism - the Chiang Mai Initiative (CMI), which set up a system of emergency liquidity provision - appeared irrelevant, as the central banks of South Korea and Singapore prioritized the establishment of new swap agreements with the United States as a means of ensuring dollar liquidity instead of relying on their Chiang Mai partners. Nonetheless, in May 2009, the ASEAN+3 finance ministers agreed to a substantial expansion and "multilateralization" of the initiative. This paper critically addresses whether CMI has been transformed into an "Asian Monetary Fund" and argues that the events of 2008-10 make substantial additional movement in that direction unlikely. (Pac Rev/GIGA)

East Asian financial regionalism has advanced significantly since the rejection of Japan's Asian Monetary Fund proposal in 1997. Key ASEAN+3 initiatives include the Chiang Mai Initiative, which is designed to provide emergency liquidity to economies experiencing currency crisis, and the Asian Bond Market Initiative, which seeks to develop regional bond markets. Surprisingly, these initiatives—despite the assertive "regionalist" rhetoric that has surrounded them and their intellectual origins in the analysis of the 1997–1998 Asian financial crisis—are explicitly designed to complement existing features of the global financial architecture, including IMF conditionality and global financial standards. The nesting of East Asian financial regionalism within the global financial architecture results from the political-economic interests of the leading economies of the region. In the absence of a major change in the political-economic environment, nesting is a stable equilibrium and is unlikely to change.