Compare and contrast the planning functions of the Japanese and Research Paper

Compare and contrast the planning functions of the Japanese and Chinese economic models - Research Paper Example The economic models perform two basic functions, which include selection of information on the basis of econometric study and simplification of the gathered information. Economic models can be classified as stochastic models, non-stochastic models, qualitative models, quantitative models, equilibrium, and non-equilibrium models. If we talk about some of the benefits of having the economic models, we can say that economic models are widely used for a variety of purposes in the economic environment of every country. Some of main uses of economic models include guiding resource allocation decisions, forecasting the economic activities, planning the functions of economy, and making appropriate decisions related to the economy. All of these uses make economic model one of the most important models for the development of any country. Let us now discuss planning functions of the economic models of China and Japan, which are two of the most progressive and well-established economies of the w orld. Comparison between Planning Functions of Chinese and Japanese Economic Models Chinese economy has seen significant success and development over the last decade. The communist government of the People Republic of China has been successful in developing a strong Chinese economy, which has started developing its roots in most of the Asian, European, and American markets. â€Å"Although the politics of China remains communist, the economics might be called Advanced Mercantilist† (SNS 2010). Chinese economists have analyzed the perfects ways to deal with the west by considering the cases of South Korea and Japan and have come up with a well-designed economic modal, which has the ability to make the Chinese economy one of the most stable economies of the future world. If we talk about the Japanese model of economy, we can say that Japanese economic model has proved to be a very useful tool not only for the analysis of the current economic situation of Japan but also for the p rojection of its future economic situation. Japanese economy has faced various shocks after the World War II but the responses of the Japanese economic model to the shocks provide us with a very good approximation of the current economy of Japan. The planning functions of the Japanese economic model also depend on the types of consumers. Unlike Chinese economic model, the Japanese economic model considers consumers to be of two types, which include permanent-income-hypothesis consumers and rule-of thumb consumers. The response to shocks becomes very realistic and effective due to identification of types of the consumers. If we analyze the most recent economic recession and the affect of that economic recession on the economies of China and Japan, we come to know that china was one of those countries, which survived the economic recession up to a large extent. It is due to the implementation of an appropriate economic model that Chinese economy did not shake as the result of recent e conomic recession. Various analyses and reports show that the countries like Germany, Japan, America, and the United Arab Emirates were affected heavily due to the recent economic recession but the economy of china was so stable that the recession could not affect it up to a large extent. Japanese economy, which is currently the world’s second largest economy, also slipped into the economic rece