421 European Journal of Political Research 43: 421–447, 2004 Japan’s political economy in comparative perspective: Macroeconomic policy and wage coordination TAKAYUKI SAKAMOTO Southern Methodist University, USA Abstract. Japan has received conflicting assessments in the comparative political economy literature. This article seeks to identify the location of Japan’s political economy within a comparative framework, building on recent analyses of macroeconomic policy and wage coordination. The author examines empirical records and shows that Japan’s regime is best considered ‘Keynesian centralization’, rather than ‘monetarist (semi)decentralization’, in light of its effective wage coordination and its anti-inflationary but flexibly accommodating macroeconomic policy. When there was national consensus on macroeconomic conser- vatism, Japan implemented restrictive policy and resembled monetarist centralization. However, Japan’s monetarist centralization did not lead to distributional conflicts and high unemployment because its decentralized but coordinated wage bargaining and weak labor made it possible for employers and unions to achieve national diffusion of wage restraint without facing solidaristic wage demands by low-paid workers. Research in comparative political economy has produced a number of insight- ful cross-national studies that examine multiple advanced industrial countries quantitatively on the assumption that there are general patterns that apply to all countries. One of the factors that make such cross-national analysis diffi- cult is the operationalization and measurement of variables that appropriately apply to countries with idiosyncrasies. In this respect, Japan is one of the coun- tries that pose a challenge to comparative political economists who try to code multiple countries. In past studies, Japan’s political economy either received conflicting assess- ments or was set aside from other Western countries because of its apparent peculiarities. For example, many comparative researchers have examined the effects on economic performance of labor institutions and central banks’ monetary policy. In coding labor’s wage coordination, Calmfors and Driffill (1988) rank Japan fourteenth (not coordinated) of 17 OECD countries. Soskice (1990), by contrast, ranks Japan first (very coordinated), even higher than social-democratic corporatist Sweden and Norway. Thus, according to Calmfors and Driffill, Japan is a successful decentralized economy, while in Soskice’s view, it is a successful coordinated one. Similarly, in the coding of central bank independence, the Bank of Japan (BOJ) almost always receives © European Consortium for Political Research 2004 Published by Blackwell Publishing Ltd., 9600 Garsington Road, Oxford, OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA