Despite deepening concerns about China’s economy, the country is not heading toward “lost decades” of Japanese-style stagnation. And yet a worrisome ambiguity clouds this verdict. Japan’s fate was sealed by its reluctance to abandon a dysfunctional growth model. While China’s embrace of structural rebalancing distinguishes it from Japan, it is struggling to implement that strategy. Unless the struggle is won, the endgame could be similar. The same conclusion emerges from a seminar on “The Lessons of Japan” that I have taught at Yale for the past six years. The course is primarily one in forensic macroeconomics – ... (full story)