May 18, 2009

Economics may be a “science” but it lacks controlled experiments. Especially in macroeconomics you can’t repeat an experiment with one variable changed and see how the single variable changes the outcome. Economists have lots of statistical tools to deal with this – but those make the discipline either incomprehensible or diabolically boring. Apologies to all those who taught me econometrics.But every now and again people throw up a controlled experiment – two situations that are very similar and differ markedly only in one major element.

Yet strangely these situations seem under-studied.What I want to do here is give a stylised version of Japanese and Korean economic history and how it pertains to the banking crisis both countries had. My knowledge of this however comes the way much of my stuff comes – from the history of the banks backwards. So I am sure to offend people with deep understandings of the political/economic history and I welcome someone telling me I am just wrong.