Economics Review

TSURU Kotaro
Senior Fellow, RIETI

The Japanese economy now stands at a critical crossroad. Amid the growing uncertainty, people are feeling insecure about their future. Unable to define a vision of their respective futures, households, companies, and the government all alike are struggling and groping in the dark to find a way out. Thinking along the lines of conventional ideas might be good enough if economic and social conditions were stable. But, at the time when an economic structure is undergoing drastic transformation, such an experience- and practice-oriented approach may result in an irrecoverable failure. In the time of change, a "theory" that is firmly supported by academic evidence, regardless of its field, should serve as a key guiding principle. A "theory" which disentangles the complexity of various phenomena and digs out the root cause is indispensable for generating bold guidelines that are not constrained by conventional ideas. For quite some time now, the true effectiveness of economics has been questioned. But we must remember that there are some brilliant achievements of economics which, like "placer gold" in the river, may be limited in number but shine and shed light on the way to solve problems in the real economy. In this column series, I would like to introduce useful economic research, and see what implications they have for actual economic and political measures. Moreover, it is my hope that a "theory" presented by these works will become a guiding principle, get implemented, and help lift the curtain on a new vista for the Japanese economy. "Give economics a chance!"