Fundamental issues in the United States-Japan economic relations

This paper is quite different from the usual Japan Economic Seminar presentation. Rather than a piece of original research, this paper is a summary of personal views and reflections about the current status of the U.S.-Japan economic relationship. The purpose is to stimulate discussion at our seminar meeting about the relationship, somewhat in continuation of what transpired at the seminar's Washington meeting concerning Marcus Noland's paper. If there is a theme or conclusion to the following pages, it is that economists need to be less purely academic in their approach to bilateral issues. Important problems do exist in the bilateral relationship; they are not all necessarily true economic problems, but neither are they simply "political" issues which economists tend to view with disdain. Dealing with these problems obviously requires tact and diplomacy, but they can be ignored only at the peril of seriously damaging the overall economic and strategic relationship. Especially now that the cold war is over, and economic aspects of the U.S.-Japan relationship are receiving relatively more attention than in the past, economists have a responsibility to be closely involved in considering the nature of the problems and their possible solutions