I do have a few comments. Japan has really not followed Keynesian principles applied at full force, possibly because they couldn't. Yet it wouldn't be incorrect to say that they had, at least in part, been trying various Keynesian measures.
They are now, finally, after years of recession, trying to fully apply Keynesian principles to their situation. However they only began doing this since Abe, and even since Abe they made the mistake of raising the sales tax by 8%, a highly anti-Keynesian move that had to be quickly rescinded. Prior to this most recent change, they applied a mixed approach that was not fully Keynesian, and it did not work. It may turn out that Keynesian economics doesn't fit their situation very well. In any case, up to now they have made more or less a mess of it.
From the late 1990s going forward there was a strong Yen. The Ministry of Finance (MOF) tried to keep the Yen down but failed. The effect of the strong Yen was, in Japan's case, deflation. Prices fell, profit margins and sales declined, workers bonuses were cut and there was retrenchment among the general public. They stopped spending. How did the authorities react. They thought about cutting rates, but there was great reluctance to do that because a large part of the japanese population lived on its Postal Savings accounts. Cutting rates would cut their income. Also insurance annuities were very popular. These guaranteed a return rate, and if rates were cut, the insurance companies would have a loss. At the same time these problems began, the stock market was selling at high multiples and yields were very low.
Japan has been in recession ever since. The differences between the U.S. economy and the Japanese economy are quite striking. Various half-hearted, partial attempts at Keynesian-like economic moves have been tried with poor results. They tried massive public works projects and built up huge debt, they tried zero interest, they tried quantitaive easing, and none of this has had the desired effect. Now, since Abe was elected, for the first time, Japan seems to be getting serious about trying to apply Keynesian principles in full force. Whether they can do it remains to be seen. My personal observation is that to an even greater extent in Japan than in the U.S. there is a conflict between to economic schools of thought, and this seems to be hampering the proper application of Keynesian economics. It's best if one commits fully and either does it or does not. The worst situation is when you have people in the same boat rowing in opposite directions. That might characterize the situation in Japan. We will see.
