Publications

During the course of my academic and professional career, I have authored and contributed to around half a thousand pieces of research and literature in English, Japanese and German, including books (as author, editor, series editor or contributor), journal papers (academic, professional as well as popular journals), conference contributions and discussion papers and reports for charitable organisations and the private sector, among many others.

The majority of my research is based on the Quantity Theory of Credit which I proposed in 1992. Furthermore I am well-known for proposing a new monetary policy, which I called ‘Quantitive Easing‘ in Japan in 1995 (which remained opposed by the Bank of Japan for years, before it adopted a distorted version of my proposal; Ben Bernanke at the Fed came closer to implementing a key aspect of my QE proposal in 2008, as a result of which the US banking sector and thus economy recovered far quicker than in other countries).

My book ‘Princes of the Yen’ (2003) became a bestseller in Japan, beating Harry Potter for six weeks in the number one position of the general bestseller lists. In the English version I warned that the ECB was likely to create credit booms, asset bubbles, banking crises and recessions in the eurozone. A documentary movie about aspects of the book was launched in 2014 (see below for a link to the full movie on YouTube).

Also in 2014, I published the first empirical test of the various theories of banking, demonstrating for the first time in the history of banking that banks do not lend money, but instead newly create credit and money (see the academic paper publications below).

Please see below for a list of major recent works that are important in my research programme.

For a list of various publication types until 2014, including contributions to TV and radio, please see this document (PDF, 37 pages).

To access and read older articles (both academic and in the press), see www.profitresearch.com (under rubric ‘Free Research’).

Research interests

  • Banking and the Economy
  • Banking and Development
  • History of Banking
  • Central Banking
  • Monetary Economics
  • Macroeconomics

Princes of the Yen (Complete Edition) out now

Order directly from publisher: Hardcopy

ISBN: 978-3-946333-01-2  Year: 2016

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New Paradigm in Macroeconomics: Solving the Riddle of Japanese Macroeconomic Performance

Book - authored
R. Werner
Basingstoke: Palgrave Macmillan
Publication year: 2005

Modern mainstream economics is attracting an increasing number of critics of its high degree of abstraction and lack of relevance to economic reality. Economists are calling for a better reflection of the reality of imperfect information, the role of banks and credit markets, the mechanisms of economic growth, the role of institutions and the possibility that markets may not clear. While it is one thing to find flaws in current mainstream economics, it is another to offer an alternative paradigm which, can explain as much as the old, but can also account for the many ‘anomalies’. That is what this book attempts. Since one of the biggest empirical challenges to the ‘old’ paradigm has been raised by the second largest economy in the world – Japan – this book puts the proposed ‘new paradigm’ to the severe test of the Japanese macroeconomic reality.

‘No Recovery without Reform? An Empirical Evaluation of the Structural Reform Argument in Japan’

Journal paper - academic journal
Richard A. Werner
Asian Business & Management, 3 (1), 2004, 7-38 https://doi.org/10.1057/palgrave.abm.9200077
Publication year: 2004

Abstract

Conventional wisdom among many economists, central bankers, financial journalists and politicians holds that Japan must implement ‘badly needed structural reforms’ (to quote from the Financial Times). ‘No recovery without structural reform’, proclaims Prime Minister Koizumi. Japan’s case is also used to advance similar reforms in other countries and regions, such as Germany, where they have already become a main plank of the government’s policies. Given this overwhelming consensus, it is tempting to assume that the structural reform theory has been thoroughly subjected to empirical tests and found to be clearly supported. However, such empirical examination has so far been lacking. This paper analyses the empirical record and tests the neo-classical theories on which the structural reform case rests. It comes to the surprising finding that there is no factual support for the structural reform argument. Supply-side factors were not responsible for Japan’s recession. An alternative demand-side explanation, focusing on credit creation, is found supported by the evidence.

Keywords

actual growth
capacity utilization
credit creation
potential growth
productivity
structural reform 

The enigma of the great recession

Book - authored
Richard Werner
Tokyo: PHP Institute Press
Publication year: 2003

Response to William W. Grimes, "Comment on Richard Werner's 'The Enigma of Japanese Policy Ineffectiveness: The Limits of Traditional Approaches, Not Cyclical Policy'"

Journal paper - academic journal
Richard A. Werner
Japanese Economy, 31 (1), 2003, 82-96 https://doi.org/10.1080/2329194X.2003.11045160
Publication year: 2003

Princes of the Yen: Japan's Central Bankers and the Transformation of the Economy

Book - authored
Richard A. Werner
Armonk, New York: M.E. Sharpe
Publication year: 2003

This eye-opening book offers a disturbing new look at Japan’s post-war economy and the key factors that shaped it. It gives special emphasis to the 1980s and 1990s when Japan’s economy experienced vast swings in activity.
According to the author, the most recent upheaval in the Japanese economy is the result of the policies of a central bank less concerned with stimulating the economy than with its own turf battles and its ideological agenda to change Japan’s economic structure. The book combines new historical research with an in-depth behind-the-scenes account of the bureaucratic competition between Japan’s most important institutions: the Ministry of Finance and the Bank of Japan. Drawing on new economic data and first-hand eyewitness accounts, it reveals little known monetary policy tools at the core of Japan’s business cycle, identifies the key figures behind Japan’s economy, and discusses their agenda. The book also highlights the implications for the rest of the world, and raises important questions about the concentration of power within central banks.

Dismantaling the Japanese Model

Book - authored
Kikkaawa, M., Werner, R.A.
Tokyo: Kodansha
Publication year: 2003

Central banking and structural changes in Japan and Europe

Book - authored
Richard A. Werner
Tokyo: Soshisha
Publication year: 2003

Aspects of Career Development and Information Management Policies at the Bank of Japan – a Frank Interview with a Former Central Banker

Journal paper - academic journal
Richard A. Werner
The Japanese Economy, 30 (6), 2002, 38-60
Publication year: 2003
Introduction

The use of eyewitness accounts to establish institutional details is common practice in many disciplines of the social sciences. While Adam Smith claims to draw on his experience of having visited a pin factory to describe the benefits of the division of labor, much of the discipline of economics has been beholden to the deductivist research methodology, which places little emphasis on the gathering and analysis of empirical data in the formulation of economic theories. However, there is a long history of inductivist economics, especially in continental Europe. Moreover, leading economists in the United States have recently stepped up their efforts to engage in fieldwork.’ In area studies, where country-specific features need to be explored, the concept of fieldwork is naturally far more widespread, such as in the context of an examination of Japanese economic institutions. Examples for the use of interviews in research on the Japanese economy include the interview with Miyohei Shinohara in Amsden (2001), or the extensive use of interviews to establish details of monetary policy implementation during the 1980s and early 1990s in Richard Werner (1999, 2002, 2003). The present paper adds to this growing strand of literature by contributing a frank interview with a former senior Japanese central bank official.

The "Enigma" of Japanese Policy Ineffectiveness The Limits of Traditional Approaches, Not Cyclical Policy

Journal paper - academic journal
Richard A. Werner
Japanese Economy, 30 (1), 2002, 25-95 https://doi.org/10.2753/JES1097-203X300125
Publication year: 2002

Post-Crisis Banking Sector Restructuring and Its Impact on Economic Growth

Journal paper - academic journal
Richard A. Werner
The Japanese Economy, 30 (6), 2002, 3-37
Publication year: 2002
Abstract

Restructuring of the banking sector has been a major topic in Japan for at least a decade now. It is also a major and recurring topic for many policymakers in both the developed world and among developing countries. This paper examines the implications of post-crisis banking sector restructuring for economic growth. First, a relevant feature of banking activity is analyzed in a basic framework linking bank credit to the economy. Using this model, the common causes of banking crises are examined and policies on how to avoid them are suggested. Next, the dynamics of banking crises are examined and how traditional bank restructuring, as also often implemented under the auspices of international organizations, affects them. This includes an analysis of the impact of increased fiscal expenditures as part of bank reforms. Finally, a modified program of banking reform that avoids the problems of traditional policies and which considers macroeconomic stability is proposed.

Monetary Policy Implementation in Japan: What They Say vs. What they Do

Journal paper - academic journal
Richard A. Werner
Asian Economic Journal, 16 (2), 111-151 https://doi.org/10.1111/1467-8381.00145
Publication year: 2002

Abstract

Since the 1970s, many central banks – including the Bank of England, the Bank of France, the Bank of Korea and the Bank of Japan – have announced that they have ceased direct credit controls. Researchers have tended to accept ‘what they say’, without gathering empirical evidence on ‘what they do’. The Bank of Japan announced that it was abandoning direct credit controls in 1982. Since then, the monetary policy literature on Japan has focussed on formal policy tools, such as interest rates. This paper presents empirical research on the actual implementation of monetary policy by the Japanese central bank. The emphasis is on the period in the mid‐ to late‐1980s when monetary policy was stimulatory and real‐estate‐related lending expanded rapidly, and the period in the early 1990s, when asset prices fell, resulting in the subsequent banking crisis and recession. The paper first briefly surveys the literature. Empirical research is then presented in three parts. Secondary sources are accessed to gain information on the mechanism of monetary policy conduct. New field work is then presented, which uses primary sources to probe the details of monetary policy implementation. Finally, econometric evidence is gathered to test various hypotheses concerning monetary policy procedures. The research successfully establishes the details and nature of the Bank of Japan’s monetary policy implementation during the 1980s and early 1990s. The findings suggest the need for a modification of the generally prevailing view, as well as the need for further research on the actual implementation of monetary policy in other countries.

A Reconsideration of the Rationale for Bank-Centered Economic Systems and the Effectiveness of Directed Credit Policies in the Light of Japanese Evidence

Journal paper - academic journal
Richard A. Werner
Japanese Economy, 30 (3), 2002, 3-45 https://doi.org/10.2753/JES1097-203X30033
Publication year: 2002
Abstract

Directed credit is seen by recent literature as having contributed to high post-war economic growth in several Asian countries, including Japan, Korea, Taiwan, Thailand, and Indonesia. Its use, however, remains controversial. This paper adopts ex ante predictive power as criterion for the evaluation of the usefulness of theories and policies. For this purpose it attempts to identify the historical rationale of the credit direction policies adopted by Japan—the East Asian country that developed earliest and most successfully. It is found that Japan’s directed credit policymakers modeled their system on the practice of the Reichsbank, under its president Hjalmar Schacht in the 1920s, and the economic thought of German development economists at the time, who argued for a strong role of banks as conduits of official guidance within an overall growth-oriented institutional design. This paper provides some support for directed credit policies and offers an alternative explanation for the emergence of a bank-based financial system in Japan and other countries.

A Discussion of Anil K. Kashyap's Paper "Sorting Out Japan's Financial Crisis"

Journal paper - academic journal
Japanese Economy, 30 (6), 2002, 61-87 https://doi.org/10.2753/JES1097-203X300661
Publication year: 2002
Abstract

The purpose of this article is to discuss the paper by Anil K. Kashyap on Japan’s financial crisis (Kashyap 2002). The reader is advised to read Kashyap’s paper in parallel with this discussion, which closely follows the structure of his paper. Comments on Kashyap’s statements are made in chronological order, and using Kashyap’s section headings.

Macroeconomic Management in Thailand: The Policy-Induced Crisis

Richard A. Werner
Werner, Richard A. (2000), Macroeconomic Management in Thailand: The Policy-induced Crisis, in Rhee, G.S. (ed.), Rising to the Challenge in Asia: A Study of Financial Markets, Vol. II, Thailand, Manila: Asian Development Bank
Publication year: 2000

Towards a New Monetary Paradigm: A Quantity Theorem of Disaggregated Credit, with Evidence from Japan

Journal paper - academic journal
Richard A. Werner
Kredit und Kapital, 30 (2), 1997, 276-309
Publication year: 1997

Abstract

Three important “anomalies” that have occured in the 1980s in several countries, including Scandinavia and Japan, have challenged the traditional monetary model: (1) the observed velocity decline and consequent instability of the money demand function; (2) significant asset price rises, often referred to as “bubbles” and (3) enormous capital outflows from Japan in the 1980s and a sudden reversal in the 1990s. In this paper, a simple model is proposed that encompasses traditional theory and manages to explain the three main anomalies. It centres on a “quantity theory” framework of credit-money ciruclation, which is disaggregated into “real” and financial transactions. Excess credit creation in the “financial circulation” is shown to be resopnsible for asset price booms, the observed velocity decline and, in an open economy extension, foreign investment. Empirical evidence from Japan supports the model. Implications for theory, further research and policy are explored.

Japanese Foreign Investment and the “Land Bubble”

Journal paper - academic journal
Richard A. Werner
Review of International Economics, 2 (2), 1994, 166-178 https://doi.org/10.1111/j.1467-9396.1994.tb00038.x
Publication year: 1994

Abstract

The aim of this paper is to examine the determinants of Japanese net long‐term capital flows in the 1980s and early 1990s. A basic framework is proposed which takes account of Japan’s so‐called land bubble by incorporating the interaction of land with the banking sector in a macroeconomic portfolio model of capital flows. Empirical evidence is supportive of the hypothesis that land‐related bank loans have been a major determinant of Japanese net long‐term foreign investment. the hypothesis of substitution between direct and indirect foreign investment also receives support, and areas of future research are mentioned.

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