STAGNATION CRISIS

Japan's Stagnation Crisis

Japan's stagnation crisis

Introduction

The decade of stagnation of the Japanese economy since 1990, are in many ways enigmas. A speculative bubble, the insolvency of many financial intermediaries and recession are indeed exceptional phenomena, internationally: twenty years of Dozens of countries have experienced this after precipitously liberalized their system bank. Rather a classic scenario of a one-time shock response, Japan has experienced a long crisis, which in good measure now speaks for itself. An average growth of 1% over the period, strong deflationary trends, bank losses continue to grow, stock market performance, which amplified losses.

Since 1995, the interest rates are lower than short-term 1.5% while the succession of stimulus now focused public debt at 130% of GDP. In other words, the peculiarity of the crisis in Japan does not its underlying causes, which are mundane, but its duration and the difficulty to give it a coherent response. Against two-examples, emphasize the magnitude of this collective failure. Sweden first experienced a banking crisis in 1991 serious disturbances due to micro-financial comparable to those observed in Japan (liberalization partial housing bubble, etc). 18% of outstanding loans have been lost, the two largest banks were seized, and the country experienced a recession of 5.2% between 1990 and 1993, due among other things to problems of banks. However, in 1994, they had been given to flow and re-privatized, while growth levels found close to the average Europe (Hoshi, 2004, pp. 229).

The crises have attracted a great deal of attention in policy debates that are currently fighting in the advanced economies. The commentators argue that we need expansionary fiscal policy in order to avoid deflation and recession. The story could never be resolved through increasing further government debt problems caused by obligations. The purpose of the editorial invention is to describe the portion of the core logic of various models devised and turned recently in order to enable the study of policy reaction to shocks. During the 70s and 80s of last century, it was customary to hear talk of Japanese miracle. The Japanese economy grew at an average annual rate of nearly 5%, the unemployment rate was around 2%, and exports grew almost 8% a year. The amazement in the ranks rulers of the world capitalist system changed as Japan has become a case study for economists and commentators of the square of an economy that fell on the 'liquidity trap', such that can be find if going back for the U.S. economy in the '30s, at the height of the Great Depression.

Discussion

After several decades of high growth and technological development accelerated, the Japanese economy is in 1999, in its ninth consecutive year of stagnation. As two important aspects of this crisis include the prolonged crisis bank, and the low response to stimuli macroeconomic governmental fiscal and monetary. This paper addresses the dimensions of the current crisis as manifestations of a depletion of the Japanese style of growth-with-debt business characteristic of earlier decades.

Ending the U.S. occupation in 1952, Japan has embarked ...