Lessons from Japans Economic Situation in the 1990s - Research Paper Example

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This research paper "Lessons from Japan’s Economic Situation in the 1990s" discusses the economy of Japan that was widely regarded as a model economy that was full of technology, bubbling asset prices as well as innovation. However, this came to change in the 1990s at the Lost Decade…

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Lessons from Japans Economic Situation in the 1990s

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Subject: Macro & Microeconomics
Type: Research Paper
Level: College
Pages: 1 (250 words)
Downloads: 2
Author: noehahn

Extract of sample "Lessons from Japans Economic Situation in the 1990s"

From the graph, it is clear that the economy of Japan stagnated for a long time during the “Lost Decade”

When the recession hit Japan, the policymakers decided to counter it and the Bank of Japan responded by cutting the interest rates. The fiscal situation of the government deteriorated sharply as the economy of Japan collapsed. The policymakers in Japan were not sensitive to the recession and they responded slowly and erratically in the face of an already deteriorating economy. In addition to that, noncooperation from some sectors hindered proper response to the fight against inflation and recession. This, therefore, led to the country taking a very long time to recover from the recession.

Lack of anticipation on how rapidly the inflation could assert itself in Japan also made the country to be hit badly by the recession (Davis, 3). When Japan was finally able to emerge from this economic crisis, it experienced stagnant economic growth due to the effect of the recession. Adherence to certain economic doctrines in Japan also made the recovery process slowly leading to a stagnant economy. An example of such a policy or doctrine is stress cautious policy where the country avoided doing anything that could cause inflation (Davis, 3).

The graph below shows the difference in government outlays between the two countries.

The USA policymakers can learn from the Japanese situation to avoid such a scenario. The policymakers should develop well-thought and effective recovery policies and implement them rapidly. In addition to that, there should be cooperation from all sectors to ensure that the policies developed are implemented well. Finally, precarious doctrines like stress cautious doctrine should be avoided to help the economy recover well.

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Retrieved from https://studentshare.org/macro-microeconomics/1644808-japans-lost-decade-what-parallels-can-we-draw-from-japans-situation-to-that-of-the-us-economy-in-terms-of-the-causes-of-prolonged-stagnation-as-well-as-the-relative-effectiveness-of-different-policies

(Japans Lost Decade (What Parallels Can We Draw from Japans Situation Research Paper)
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