Skip to main content

The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession, Revised Edition

The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession, Revised Edition

Richard C. Koo

ISBN: 978-1-118-17918-5

Nov 2011

256 pages



The revised edition of this highly acclaimed work presents crucial lessons from Japan's recession that could aid the US and other economies as they struggle to recover from the current financial crisis.

This book is about Japan's 15-year long recession and how it affected current theoretical thinking about its causes and cures. It has a detailed explanation on what happened to Japan, but the discoveries made are so far-reaching that a large portion of economics literature will have to be modified to accommodate another half to the macroeconomic spectrum of possibilities that conventional theorists have overlooked.

The author developed the idea of yin and yang business cycles where the conventional world of profit maximization is the yang and the world of balance sheet recession, where companies are minimizing debt, is the yin. Once so divided, many varied theories developed in macro economics since the 1930s can be nicely categorized into a single comprehensive theory- The Holy Grail of Macro Economics

Related Resources


Request an Evaluation Copy for this title


Chapter 1 What kind of recession has Japan been through?

Chapter 2 Characteristics of balance sheet recessions that should be kept in mind during the recovery.

Chapter 3 The Great Depression was also a balance sheet recession.

Chapter 4 Monetary, foreign exchange, and fiscal policy during a balance sheet recession.

Chapter 5 Yin and Yang economic cycles and the Holy Grail of macroeconomics.

Chapter 6 Pressure of globalization.

Chapter 7 Ongoing bubbles and balance sheet recessions.

Chapter 8 World in Balance-Sheet Recession.

Appendix: Thoughts on Walras and macroeconomics.


Reviews from the previous edition

"...provide fascinating insights into the problems of Japan...interesting thesis" (, August 2009)

"…the Japanese policymakers who told everyone the US was in danger of falling into a prolonged period of economic weakness were right. To understand why this is true, you need to read a brilliant book by Richard Koo of the Nomura Research Institute." (Financial Times, January 2009)

"…the definitive book on Japan's decade-long recession in the 1990s." (USA Today, March 2009)

"Books about the current global economic crisis are being written and published by the truckload. But few – perhaps none – are worth reading… Richard Koo, chief economist at the Nomura Research Institute in Tokyo, a think tank attached to Japan's biggest investment bank, watched Japan's 'lost decade' from an excellent vantage point: he was close enough to understand the detail, data and ways in which both corporate and political decisions were made, and independent enough to be able to analyse what happened in a reasonably detached and cool way." (Survival, May 2009)

"A must-read to an understanding of what Japan went through and what the United States and Europe may experience is Koo's latest book The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession." (The Edge Financial Daily, December 2008)