“In Japan, overall prices have not risen since the late 1990’s,” which is a very bad thing (Gruber). There have been multiple instances where the Bank of Japan has tried to correct this failure, but they had no success. Three of these attempted corrections were through the decrease of interest rates, quantitative easing, and an expansionary monetary policy. However, more recently there has been another recovery attempt through similar methods, in addition to an increased consumption tax rate. The Japanese governments first attempt at stopping the deflationary spiral was through decreasing its interest rates.
Retrieved from http://www.businessweek.com/globalbiz/content/may2007/gb20070523_237538.htm Seiyu. (n.d.). Sustainability. Retrieved October 27, 2012, from http://www.seiyu.co.jp/company/sustainability/ Tesco Announces Japan Pullout. (2011).
(n.d.). Public Citizen. Retrieved September 16, 2011, from http://www.citizen.org/Page.aspx?pid=531 Teslik, L. H. (2009, July 7). NAFTA's Economic Impact. Council on Foreign Relations.
Showdown Over ‘Showrooming’. The Wall Street Journal. Retrieved from http://www.shoppersitenews.com/PDF/Issue58_Article_01_Target_Sends_Letter_to_Vendors_Asking_for_Help.pdf Zimmerman, A. (10/12/2012). Best Buy to Match Online Prices.
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 contract towards the government. Fiscal is the use of a government taxation to influence the economy.
Most agree that the huge asset ‘bubble’ was the cause for the initial stagnation, but they disagree as to the reasons for why this persists. Some are of the opinion that the domestic sector’s lack of dynamism and an aging population are to blame because they hinder domestic spending (Samuelson, 2010). Other economists, such as Paul Krugman, believe that consumers and companies’ excessive savings are the root causes (Kuepper, n.d.). Very low interest rates drove stock market and real estate speculation in the 1980s. All the speculation during the boom cycle caused the beginning of the crisis.
“The Lessons of Japan’s Economy.” Sunday Review. 19 October 2013. Web. 11 February 2014. Traphagen, John.
“Free Trade in Theory and Practice.” The New American. Web. 2 Nov. 2013 Friedman, Milton, and Rose Friedman. "The Case for Free Trade." Hoover Institution.
GigaOM. Retrieved on October 21, 2011, from http://gigaom.com/2010/12/21/a-net-neutrality-timeline-how-we-got-here/ Plumer, B. (2010, December 4). Tech-Tock Why it’s time to put an end to the net-neutrality debate. The New Republic.