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Japan's Bubble, Deflation, and Long-term Stagnation

Online ISBN:
9780262289467
Print ISBN:
9780262014892
Publisher:
The MIT Press
Book

Japan's Bubble, Deflation, and Long-term Stagnation

Koichi Hamada (ed.),
Koichi Hamada
(ed.)
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Anil K Kashyap (ed.),
Anil K Kashyap
(ed.)
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David E. Weinstein (ed.)
David E. Weinstein
(ed.)
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Published online:
22 August 2013
Published in print:
17 December 2010
Online ISBN:
9780262289467
Print ISBN:
9780262014892
Publisher:
The MIT Press

Abstract

Japan’s economic bubble burst in the early 1990s, and the country entered its famous “lost decade”—a period of stagnation and economic disruption that persisted until 2003. The current declines in global equity and real estate markets have eerie parallels to Japan’s economic woes of the 1990s. If we are to avoid repeating Japan’s experience on a global scale, we must understand what happened, why it happened, and the effectiveness (or ineffectiveness) of Japan’s policy choices. In this book, economists—Japan specialists and others—bring state-of-the-art models and analytic tools to bear on these questions. The chapters generate new facts and new findings about Japan’s lost decade. As much of the research shows, the slowdown can be broken down into two phases: A typical recession; followed by a breakdown in the economy likely due to insufficient restructuring, which is not well described by conventional models. The contributors offer arguments showing that Japan’s experience, and the unconventional—sometimes unsuccessful—measures adopted by Japan’s government and central bank, offer valuable lessons for our post-boom world.

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