Stagnant Japanese Economy Essay - 1434 Words

Something having no current or flow and often having an unpleasant smell defines the word stagnant. The Japanese economy has been stagnant for about two decades now. There are many reasons for this ‘unpleasant smell’. Firstly, the fiscal policy in Japan, the surplus in savings, its once economic bubble power and the policy management in Japan put an end to any flow that there once was. Secondly, the Global flow and structural impediments are a cause of the lack of current. The liberal Democratic Party and Vested Interest Groups and also the monetarist explanation come into play. Looking at these such topics closely give a better look and realization of Japans stagnant economy. Firstly, in 1997, Japans fiscal policy was causing output in†¦show more content†¦It would, in effect, offset deflation, by constructing an anticipation of escalating prices. Cutting public works could make up the immediate revenue loss, and the upcoming tax escalation would put Japans fin ances on a sturdier path. It is neither too late nor too expensive for Japan to revitalize its economy by pursuing proper fiscal expansion, financed by the Bank of Japan buying government bonds. A world-class manufacturing power was lead into a deep slump. Japan has traditionally possessed a remarkably high savings rate and a moderately low consumption rate. Throughout the previous two decades of recovery and high-speed growth, this ‘savings surplus’ provided greatly needed capital to private industry in the form of bank loans. This money was used to build and expand Japan’s industrial infrastructure power. However, during the 1990’s the ‘savings surplus’, once the essential fuel for high-speed development became a stern obstruction, leading to a severe collapse in demand and causing a heavy drag on Japan’s economic recovery. The so-called powerhouse country that was known to be Japan, known to be unstoppable was known never to fall. Japan seemed to be unstoppable after there amazing recovery post World War II compared to the rest of the effected countries. Japan had an economic bubble in the 1980’s to the later part of the decade however; an insidious cancer took root and metastasized in Japan’s economic infrastructure. The cancer was vastly over-inflatedShow MoreRelatedThe Bank Of Japan s Monetary Stimulus Program Essay954 Words   |  4 Pagesrecently blamed Brexit for the failure of its monetary stimulus program, and extended economic ramifications. The banks quantitative easing (QE) negative interest rates have failed to save the Japanese economy from stagnation. Global market uncertainty in light of Brexit instigated a rally for the Japanese Yen on the FOREX, leading to an appreciation of the Yen and the subsequent failure of the BofJ’s monetary stimulus. 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