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. ÍNDICE PART I: INTRODUCTION Prologue: Searching for a New Kind of Economics Japanese economic performance during the 1990s PART II: ENIGMAS: CHALLENGES TO THE TRADITIONAL PARADIGM The Enigma of the Ineffectiveness of Fiscal Policy The Enigma of the Ineffectiveness of Interest Rate Policy The Enigma of Japan#s Long Recession The Enigma of the Ineffectiveness of Structural Policy The Enigma of Economic Growth The Enigma of the Velocity Decline The Enigma of Japanese Asset Prices The Enigma of Japanese Capital Flows in the 1980s The Enigma of Japanese Bank Lending The Enigma of Banking and its Recurring Crises PART III: EXPLANATIONS: APPLYING THE NEW PARADIGM Solving the Enigma of Banking and Money Credit, Money and the Economy Explaining the Velocity Decline The Determinants of Growth The Cause of Asset Price Bubbles and Banking Crises The Determinants of Japanese Capital Flows in the 1980s Why Fiscal Policy Could Not Work Monetary Policy in the 1990s and How to Create a Recovery Monetary Policy in the 1980s: How Bank Credit was Determined PART IV: THE GOAL OF MACROECONOMIC POLICY Banking Reform The Goal of Fiscal, Structural