this project is based on case study i have done and i have tiered to find out different problem faced by japan during 1990

1. -----
TOPIC
The Japan's Lost two
Decades and
Continuing Struggle

2. Rubrics:
CATEGORY 5 marks
Superior
4 marks
Good
3 marks
Acceptable
2 marks
Marginal
1 mark
Inadequate
Points
awarded
Introduction(main
idea and objectives)
(5marks)
The introductiontells the main
idea, gives clear objectives
The introductionclearly
mentions the mainidea and
objectives but they arestated
amongst toomanydetails.
The introduction
does not clearly
state either the
main idea or the
objectives. There
are too many
irrelevant details.
Introduction does
clearly stateeither
the main idea as
well as the
objectives.
Introduction does
clearly stateboth
the main idea as
well as the
objectives.
Does not display
an understanding
in line with the
topic.
Sequencing
(Presentation of
details in proper
logical orderingand
sections)(5marks)
Details are presentedin a logical
order. They aredividedinto
relevant sections. This means each
section contains details relevant to
the title. This effectively keeps the
interest of the reader.
Details are presentedin a
logical order. Theyare divided
into sections. But some
sections do not containthe
relevant details. This makes the
writingless interesting.
Some details are
not presentedin
logical order,
This distracts the
reader even
though they are
presentedin
relevant sections
Many details are
not in a logical
order andnot
divided and
includedin
relevant sections.
There is little
sense that the
writingis
organized
All topics are not
in logical and
expectedorder.
No care is taken
to divide them
into relevant
sections. There is
very little sense
that writingis
organized.
Discussion of the
topic , Ideas (5
marks)
Clear evaluationof thetopicwith
regardto its relevance,and
problems, connectiontothe theory,
Effective use of figures, tables
using MS Excel andillustrations
Clear evaluationof thetopic
andconnectiontothe theory,
but effective use of figures,
tables andillustrations are not
there.
Evaluationof the
problem is not
clear at several
places, effective
use of figures,
tables and
illustrations are
not there
Student uses just
the facts to
present the topic.
There is not much
of the student's
own personalityin
the writing.
Effective use of
figures, tables and
illustrations are
not there
Informationis
gatheredfrom
electronic sources
but the student
does not knowits
relevance and
importance
References Student make more references that
are grade level appropriate(5)
Student makes a couple of
references that are grade level
appropriate.(4)
Student makes
few references
that are grade
level appropriate
(3)
Student makes
less references or
link that are grade
level
appropriate.(2)
Student makes no
reference that is
grade level
appropriate.(1)
Practical application
of the topic toreal
world issues (5 mark)
Student has chosen excellent real
world issue to support thetopicand
makes no errors in relatingthe topic
to that issue through the use of
theory, figures andillustrations.
Student has chosen an
excellent real worldissue to
support the topic but makes
some errors in relatingthe
topic.
The real world
issue chosen by
the student is not
very appropriate
to support the
topic although
the Student has
triedto relate the
concepts
practically
offered.
Student has not
chosen an
appropriate real
world issue and
makes many
errors in practical
application.
Student has not
relatedthe topic
with any real
world issue
Conclusions(limitatio
ns, implications and
recommendations )(5
marks)
The limitations, implications and
recommendations are well
explainedin a coherent manner and
followfrom the discussion of the
topic andpractical applicationto
the real worldissue without any
errors
Some errors are observedin
the relationshipbetweenthe
limitations, implications and
recommendations andthe
discussion of the topic and
practical application to thereal
world issue
A lot of errors
are observedin
the relationship
between the
limitations,
implications and
recommendations
andthe
discussion of the
topic and
practical
applicationtothe
real worldissue
The conclusion
does not include
either of the
implications,
limitations or
recommendations
andthe discussion
of the topic and
practical
applicationtothe
real worldissue
The conclusionis
completely
unrelatedto
between the
limitations,
implications and
recommendations
andthe
discussion of the
topic and
practical
applicationtothe
real worldissue

3. PEER RATING
NAME: REG.NO: ROLL NO: RATING SIGNATURE
Saurabh Kumar 11608095 A11
0
Babloo Kumar 11608096 A12
10
Sukhmanpreet Singh 11607155 A13
10
Amandeep Singh 11606335 A14
10
Utkarsh Bansal 11606356 A15
10
SUMITED TO: SUMITED BY:
Ms. Isha Gupta Babloo kumar (11608096)
Sukhmanpreet Singh(11607155)
Amandeep Singh (11606335)
Utkarsh Bansal (11606356)

4. CONTENT
1 INTRODUCTION………………………………………………
1.1 ECONOMY OF JAPAN………………………………………………………1
1.2 ABOUT ASSIGNMENT…………………………………..…………………1
1.3 LOST DECADE (JAPAN)………………………………..………………….2
1.4 ECONOMY SANARIO DURING THE POST 1990s….…………………..3
1.5 PROBLEM FACED BY JAPAN CURRENT ECONOMY (2014)………4-5
2.1 CAUSES OF LONG-TERM RECESSION IN JAPAN………………….….5-8
2.2 EFFECT OF RECISSION………………………………………………….8-9
2.3 ECONOMIC POLICS OF JAPAN DURING 1990s……………………..10-13
2.4 HISTORICAL EVENTS ……………………………………………….13-16
3.1 ANYLISIS OF ASSIGMENT……………………………………………….17
3.2 SLOUTION OR REMEDIES……………………………………………18-19
4.1 REFERENCE………………………………………………………………..19
5.1 PRACTICAL APPLICATION ON REAL WORLD……………………….20
6.1 CONCULSION………………………………………………………………22
LIST OF TABLE AND DIGARAM
1.1 GROWTH RATE……………………………………………………………3
1.2 UNEMPLOYMENT RATE…………………………………………………4
1.3 INFLATION RATE AND NOMINAL INTREST RATE………………….5

5. INTRODUCTION
1.1 ECONOMY OF JAPAN
The Economy of Japan is the third largest in the world by nominal GDP (Gross
Domestic Product) and the fourth-largest by purchasing power parity(PPP) and is
the world's second largest developed economy. Japan is a member of the G7.
According to the International Monetary Fund, the country's per capita GDP (PPP)
was at $37,519, the 28th highest in 2014 down from the 22nd position in
2012. Due to a volatile currency exchange rate, Japan's GDP as measured in dollars
fluctuates widely. Accounting for these fluctuations through use of the Atlas
method, Japan is estimated to have a GDP per capita of around $38,490.
Japan is the world's third largest automobile manufacturing country,[18] has
the largest electronics goods industry, and is often ranked among the world's most
innovative countries leading several measures of global patent filings Japan is the
world's largest creditor nation. Japan has the highest ratio of public debt to GDP of
any developed nation
1.2 ABOUT ASSIGNMENT
This assignment is all about The Japan’s lost two decades and they continue
struggle .In this assignment we will come to know how the Japan faced this
problem and what are reason behind this problems and how they overcome this
and effects of its in world economy and related issues

6. 1.3 LOST DECADE (JAPAN)
The Lost Decade or the Lost 10 Years is a period of economic
stagnation in Japan following the Japanese asset price bubble's collapse in late
1991 and early 1992. The term originally referred to the years from 1991 to
2000, but recently the decade from 2001 to 2010 is often included, so that the
whole period is referred to as the Lost Score or the Lost 20 Years . Broadly
impacting the entire Japanese economy, over the period of 1995 to 2007, GDP fell
from $5.33 to $4.36 trillion in nominal terms, real wages fell around 5%, while the
country experienced a stagnant price level While there is some debate on the extent
and measurement of Japan's setbacks, the economic effect of the Lost Decade is
well established and Japanese policymakers continue to grapple with its
consequences. It took longer to recover from the impact of these events because
the conditions imposed by the new environment were not favorable to the Japanese
management style at that time
During the period of 1990s and 2000 made huge impact on Japanese economy and
it made fallen in saving and investment rates and thence the growth rate which not
only low levels but in some years its goes negative figure. It also lead to increasing
in unemployment rate, fiscal deficit and current account surplus: fall inflation rate
And turning into deflation, falling interest rate, generally falling share and property
prices and first appreciating until 1995 then fluctuating both ways the foreign
exchange rate: and political instability, among other factors taking adverse
numbers accordingly 1990s and 2000s have been termed as the lost decades of
Japan which has seem to be deep impact still in the economy of Japan

7. 1.4 ECONOMIC SCENARIO DURING THE POST 1990
After the World War 2 Japan implemented stringent tariff and policies to
encourage the people to saved a good part of their incomes which leads more
money in banks and makes loans and credit easier to obtain and so investment
soared .This lead to economic prosperity and the country performed remarkably
well until around 1970. It attained an average growth rate of 9.5 percent during
1955 through 1970.
But the tempo could not be sustained anymore and growth rate fell to an average of
3.8 per cent during 1971 to 1990 and to a low of 0.8 in the last two decades ending
2010. In particular during the decade of the 1990s the average rate of growth was
not only around 1 per cent it was even negative in two of ten year period. Further,
during the decade 2000-2009, the average growth rate achieved comes to ever
lower than 1 per cent with negative rates again 2 out of 10 year
-8
-6
-4
-2
0
2
4
6
8
10
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
growth rate
growth rate

8. Source:file:///C:/Users/Hp/Documents/hayashi-prescott.pdf
 Unemployment rate was very high as compare to previous year. It is
recorded as rates happen to be the highest in the japans’ history since it
began compiling the data in 1953.
The total population has remained more or less static and the working age
population had started falling around .this has caused fall in work force which
increase the unemployment rate in the country which affected adversely to
Japanese economy during post 1990
 Inflation rate and Interest rate : condition even become worse for Japanese
economy and due to threat from deflation and easy monetary policy to tame
recession the nominal interest has also fell
0
1
2
3
4
5
6
1990 1999 2002 2012
UNEMPLOYMENT RATE
UNEMPLOYMENT RATE

9. 1.5 PROBLEM FACED BY JAPAN CURRENT
(2014)ECONOMY
Due to post 1990s economy situation they were still recovery properly from that
recession and they are still facing many problems which of them were listed below:
 Low growth rate: Growth rates refer to the percentage change of a specific
variable within a specific time period, given a certain context. For
investors, growth rates typically represent the compounded
annualized rate of growth of a company's revenues, earnings, dividends and
even macro concepts such as GDP and the economy as a whole.
 Threat of deflation: Deflation is a contraction in the supply of circulated
money within an economy, and therefore the opposite of inflation. This is
distinct from but similar to price deflation, which is a general decrease in the
3.1
0.3 0.3
7
2.2
1.4
0
1
2
3
4
5
6
7
8
1990 1999 2012
INFLATION RATE
NOMINAL INTREST RATE

10. price level, though the two terms are often mistaken for each other and used
interchangeably.
 Relatively high unemployment- job shortage: It is situation of economy in
people are willing to work but they are not getting work which lead to
shortage of work and in Japan it has taken place due to less working class
people its mean people are generally above 60 or less than 10 years
 High fiscal deficit and perhaps the most heavily indebted nation in the
world in term of the public debt as percentage to GDP (estimated at 214%in
2012as compared to 64 per cent in USA, 126% in Italy, 161%in Greece and
so on –vide CIA World fact book, 2013)
 Falling saving and investment rate (each has fallen from around 33 to around
22% of GDP): Since Japanese are relatively risk averse and have bequest
motive etc they save more and spend less. Accordingly the resulting growth
came less from domestic demand and more through exports but due to threat
deflation and shortage of job lead to fell in saving and investment of Japan
 Aging population and shrinking workforce leading to rising health care cost
(24 per cent of Japanese are in the age group of 65 and above the birth rate
in Japan is the lowest (8 per 1000) among the developed countries and the
growth rate in population is at zero
 Swathes of depopulated country side
 Political instability (the current prime minster is the 9th PM since 2001
And 16th since 1990

11. 2.1 CAUSES OF THE LONG-TERM RECESSION IN
JAPAN
Japan's strong economic growth in the second half of the 20th century ended
abruptly at the start of the 1990s. In the late 1980s, abnormalities within the
Japanese economic system had fueled a speculative asset price bubble of a massive
scale. The reason behind this cause is given below:
Bubble economy can lead to disastrous consequence as it occurred in the
1930s in the form of Great Depression and during the 1990s in Japan. The
condition misallocates resources. The period of crash following this
condition adds to the devastation. It is seen that this economic condition has
farfetched effects. The Japanese asset price bubble was an economic
bubble in Japan from 1986 to 1990, in which real estate and stock prices
greatly inflated. The bubble's collapse lasted for more than a decade with
stock prices bottoming in 2003, until hitting an even lower low amidst
the current global crisis in 2008.
 Bank deregulation - As competition began, the banks rushed to find new
borrowers and projects in SMEs and land & property investment. They
lacked the ability to correctly evaluate these new borrowers and projects.
When the economy was booming, they over-lent. When the bubble ended,
these loans became a huge mountain of bad debt.
 Monetary Easing - In 1985 there was a sharp yen appreciation, and the
Bank of Japan lowered short-term interest rates and eased money in
response. The Bank of Japan's policy reaction function is such that

12. traditionally, Japan's monetary policy responds positively (becomes
expansionary) to (i) yen appreciation and (ii) domestic recession.
 Aging Population-Japan has achieved the highest life expectancy in the
world, but its retirement age is still 65 years of age. The working population
(i.e., those aged between 15 and 64) is diminishing drastically while the
elderly population (those aged 65 and older) is growing rapidly. The aging
population and the diminishing workforce is one of the biggest causes of
long-term recession in Japan.
 Monetary Transfers from Central to Local Governments- expenditure
from the general account budget of the Government of Japan in 2015. About
16% of total government spending is allocated to local governments, making
it the second largest government expense after social security. Local
governments rely too heavily on central government transfers and do not
make efforts to revitalize regional economies. In addition, a rigid
distribution system within agriculture cooperatives has put farmers in a weak
position, and they are unable to make innovations in agricultural production.
 Banking Behavior- In the 1980s, Japanese banks issued loans based on
collateral. From 1991 onwards, land prices started to decline and banks
began to accumulate bad loan assets. The number of banking failures started
to increase immediately after the financial bubble burst, reaching a peak
almost one decade later.
 Excessive Contractionary Monetary Policy- Japanese monetary policy in the
late 1980s was too easy and contributed to the development of an economic
bubble. After the bubble burst, Japan’s monetary policy was over tightened,
drastically reducing the lending capacity of Japanese banks.
 High Appreciation of the Yen in the Mid-1990s- fluctuations in the dollar–
yen exchange rate during 1990–2014. Appreciation of the yen in the mid–1990s

13. caused Japanese manufacturing companies to relocate from Japan to other
Asian countries. Wage increases also pushed Japanese companies abroad. As a
result, domestic production started to diminish
 Banking Crisis of 1998- Japanese banks were in turmoil in the late 1990s. In
total, 181 banks went bankrupt. Most banks that failed were small, or were
credit cooperatives. The main reasons for failure were:
(i) too much concentration on lending to specific sectors (such as the
construction and real estate sectors);
(ii) increased stress placed on the lending of regional banks due to regional
recessions;
(iii) mismanagement and fraudulent lending; and
(iv) failure in securities investment and a lack of investment knowledge.
During the 1980s, the interest rate was relatively low and banks were eager to lend
which was based more on relationship and collateral than on expected cash flows.
In consequence, people borrowed to invest in real estate and stocks and even banks
invested in such assets. This resulted into soaring prices of such assets in Japan
Japan stock market index Nikkei rose from its level of about 13000 in December
1985 to about 38916in December 1989 even the real estate price tripled during the
1980s. Recognizing that the bubble was unsustainable, the bank of Japan sharply
raised interest rate in late 1990 which caused the bursting of the bubble and the
stock price crashed. The fall in land prices followed during the early 1990s. These
eroded the wealth of household, which worsened the position of the borrowers who
defaulted on their bank loan. In consequence there happened a phenomenal rise in

14. non- performing loans/assets of banks. Thus bank suffered some even become
insolvent and financial crisis resulted. In consequence there was credit crunch
which affected adversely the investment and growth. The erosion of private wealth
reduced the purchasing power, there by impinging on demotic demand, leading to
accumulation of inventories cuts in production and increase in unemployment.
During the 1990s the interest rate in Japan declined drastically making loans cheap
and saving unattractive. This led Japanese to move their saving abroad and
foreigners to borrow from Japan. In consequence investment suffered which
hampered growth.
2.2 EFFECT OF RECISSION
Despite mild economic recovery in the 2000s, attractive consumption of the 1980s
has not returned to the same pre-crash levels. Difficult times in the 1990s made
people frown on ostentatious displays of wealth, while Japanese firms such
as Toyota and Sony which had dominated their respective industries in the 1980s
had to fend off strong competition from rival firms based in other East Asian
countries, particularly South Korea. Many Japanese companies replaced a large
part of their workforce with temporary workers, who had little job security and
fewer benefits. As of 2009, these non-traditional employees made up more than a
third of the labor force. For the wider Japanese workforce, wages have stagnated.
From their peak in 1997, real wages have since fallen around 13%—an
unprecedented number among developed nations.
The wider economy of Japan is still recovering from the impact of the 1991 crash
and subsequent lost decades. It took 12 years for Japan's GDP to recover to the
same levels as 1995. And as a greater sign of economic malaise, Japan also fell
behind in output per capita. In 1991, real output per capita in Japan was 14%

15. higher than that of Australia, but in 2011 real output had dropped to
14% below Australia's levels. In the span of 20 years, Japan's economy was
overtaken not only in gross output, but labor efficiency, whereas previously it was
a global leader in both.
2.3 ECONOMICS POLICES OF JAPAN DURING 1990
Though most prime ministers had rather short term during the 1990s, Japanese
government did not sit silent on the on the happing in the economy. The
government initiated large spending large spending programs try to stimulate the
economy. Japanese government spent over one trillion $ US on the public works
project in the 1990’s. In consequence, Japans fiscal deficit increases 10% of the
GDP in 1999 and remained high during next few years , taking Japans gross debt
to GDP ratio from 58% to 114% in 2000 , to 144% in 2005 to 190% in 2011 and
to 214% in 2012. The Keynesian model of stimulating the depressed economy
through government expenditure did not work enough to cure the recession. The
critics have argued that the Japanese government was slow in initiating the
expansion and when spending was increased it was not adequate in relation to the
size of the country. Further, since there was political instability, a sizable part of
the expenditure was considered as wasteful. In addition, following the Ricardo-
Barro theory of equivalence, people started worrying about increased further tax
liabilities and thereby customizing on their spending. This rendered fiscal policy
less effective.
Bank of Japan did make effort to use it’s monetary policy to stimulate the
economy. The discount rate, the policy rate of the country, has been frequently and
heavily used in Japan to manage the money and credits level for long. However its
use became much more pronounced during the 1900’s. The said rate stood at 6% in

16. 1990’s, was lowered to 4.50% in 1991, 3.25% in 1992, 1.75 in 2001. Since the
discount rate is a signal rate, the other rate followed suit. For example, the lending
rate fell from 7% in 1990 to 2.2% in 1999 and 1.4% in 2012, which stand at 0.1
currently. However, the easy money policy did not do enough good to revive the
economy. The new policy was partially crowded by large scale bank failures cause
loss of public trust in banks and banks becoming more cautious. Remember that
when people lost trust in the banks they moved from financial assets to currency
and when bank try to avoid risk, they hold their assets more in cash and less in
loans. People go for liquidity whwn intrest rate is very low . Each of these movers
lower the money multiplier and thereby adversely affect the quantity of money in
the economy. Incidentally note that microeconomics theory suggest that when the
intrest rate is too low, the country could be in liquidity trap and if so the monetary
value is impotent with regards to its affects on income and unemployment.
However, under such a situation, the fiscal policy is quite strong, provided it has a
reasonable scale and is well focused! Further could the monetary policy influence
price expectations and thereby soften recession? To fight deflation then the short-
term intrest loan is close to zero, Japan applied the quantitative technique toll of
the monetary policy for the first time. During tis time the Bank of Japan purchased
more government bonds than would be required to set intrest and equality and
extend the terms of its financial papers purchasing operations. With QE, Bank of
Japan flooded commercial banks with liquidity to promote private lending
investments and thereby economic growth. Paul has argued that Japan lost two
decades in an example of a liquidity trap. Some economists have defined QE as-
“an expression of Central bank balance sheet”. And accordingly the recession is
called as a “balance sheet recession”.

17. 2.4 HISTORICAL EVENTS
Japan has created history on several occasions. First on, in the mid -19th century,
the country embraced the west to become an industrialized nation after century of
isolation. And second damage by the world war2, it together with Germany,
achieved high growth rate during the post-war years lasting through 1960s and a
bit beyond.
1. ATOMIC BOMB
6th august 1945 was a black day in history of Japan as the city Hiroshima was
bombarded with a sturdy atomic bomb named little boy which claimed more than
80000 lives. The country was soaked in death. Three days after Nagasaki was
stormed with another potent atomic bomb named fat man that rocked the entire
nation claiming 40, 000 lives.
2. INTERNATIONAL MILITARY TRIBUNAL FOR FAR
EAST
Also called as Tokyo trials the international military tribunal for east was
summoned up 29 April 1946 to fabricate three types of war crimes for Japanese
empire. People who advocated or instigated war or were suspicious of being
involved in machination plots were descended into class A crime.

18. 3. CONSTITUTION OF JAPAN
The constitution of Japan was put into effect from 3rd may 1947 under the
American possession. The constitution rendered universal suffrage, wiped out
Emperor Hirohito and expunged the Japanese’ prerogative to make war. The
constitution was framed under the superintendence of Douglas Macarthur.
4. JAPAN’S INDEPENDENCE
Japan had been an emancipated country since beginning. After World War 2
debacle Japan was captured by U.S forces for a breviloquent time. On 1ST January
1952 America emancipated Japan from its clutches after which Japan got an
official declaration of being an independent country.
5. JAPAN JOINS UN
Japan joined hands with united nation in 1956 with an aim to promote peace and
augment the harmonious relation between two countries. From 1956 onward Japan
has been conducting umpteen of international cooperation programmers with U.N.
6. TOKYO OLYMPICS
One of the auspicious and jubilation moment for Japan was when it got opportunity
to host 1964 summer Olympics an international sport event in Tokyo that took
place from 10 to 24th October. South Africa was forbidden from taking part in
Tokyo Olympics due its discrimination policy.

19. 3.1 ANYLISIS OF ASSIGNMENT
We have soon in the a above a topic how Japanese suffered during the 1990.In
1990 Japan got deep impact on its economy my due to several reason such as
bubble of price of asset and fall in investment rate etc. Which make country suffer
lots and they are still suffering and not able to recovery from the recursion.
We all know that Japan is technology improved country
and industry based country after World War 2 it together with flourished and got
huge growth in their economy. As people of Japan were relatively rise taker and
have be quest motive etc, they save more and spend less which result in less
growth from domestic demand and more through experts
In the beginning of 1970,financial sector was liberalized and interest
rate de-regulated, which created strong banking which in turn facilitated growth
but third the decades of 1990 and 2000 have been bad for Japan during which their
saving and investment rates and the growth rate which not only low levels but in
some years even goes negative figures increasing unemployment rate, fiscal deficit
and current account surplus, falling inflation falling interest rate, generally falling
share and property prices etc. which made 1990’s and 2000’s as the lost two
decades for Japan. Which has been still not recovered properly?
We have discuss reason behind this problem which made huge impact on the
Japanese economy and how Japanese government trying to recovery from the
impact through different policies but they were still lacked.

20. 3.2 SLOUTION OR REMEDIES
So, we have seen how Japan suffered during past 1990 due to their economy
policies and unstable economy and many more reason. We are just trying to add
some policy which may have changed or protect the Japan from their crisis.
 POLITICAL SITUATION: It means people who govern country and take
different steps to improve country .we think if political condition of japan
was in balance they would have not suffered this problem but they are
political stability in their country
CENTRALBANK DECISION:It bank which control monitory policies in
country and control inflation and deflation of country of country during 1990
and after it. Central bank of Japan has not increased the rate of interest they
have not suffered this entire problem. Due to increase in interest the rate of
investment has fallen at that time.
CENTRAL ACTION SHOULD HAVE TAKEN WHICH GDP WAS
DECREASING: As we have seen how GDP of Japan was decreasing
during the period of 1990 if Japan should have taken some sudden steps then
they may not have suffered this problem.
 INCREASE THE WORK FORCE: As Japan has meet with shortage of
workforce during the recession period. If people of Japan has faced this
faced this problem if they try to coup with problem then maybe this situation
was to arise.
 Act quickly to stem with the problem: The bank of japans’ reluctance to
act quickly cause a crisis among investors and they may avoided their
problems

21.  SPENDING IS NOT THE ANSWER: Japan attempt to spend on public
work projects was not particularly successful in helping it recover more
quickly from its economic wacs.
 DON’T RACK UP DEBT: Japan massive level of debt were ultimately
responsible for its crisis and the lost decade and boj was behind the curve in
raising interest rates
4.1 REFERENCES
1. https://www.adb.org/sites/default/files/publication/159841/adbi-wp521.pdf
2. http://fhayashi.fc2web.com/Prescott1/Postscript_2003/hayashi-prescott.pdf
3. https://en.wikipedia.org/wiki/Lost_Decade_(Japan)
4. http://fordschool.umich.edu/rsie/workingpapers/Papers476-500/r484.pdf
5. http://www.tradingeconomics.com
6. http://www.boj.or.jp/en/
7. http://www.aei.org/
8. Bank of Japan. Foreign Exchange Rates. Time series database.
9. Bank of Japan. 2014a. Basic Figures of the Flow of Funds—Third Quarter
of 2014. 24 December. Research and Statistics Department: Tokyo.
10. Bank of Japan. 2014b. Flow of Funds—Overview of Japan, US, and the
Euro area. 24 December 24. Research and Statistics Department: Tokyo.
11.

22. 5.1 PRACITCAL APPLICATION ON REAL WORLD
Due to recession in Japan it has affected many other countries in many ways in
some of them were given below:
 Decrease ofexport from Japan: certain country which used to depend on
Japan for their export has to export it from other country which increases
their costwhich made them to suffer too during the recession period.
 Decrease ininvestment: As Japan was industrialized county there mainly
focus was on industry and productionof new technology so country who
used to invest in this industries in Japan has decrease their investment as
they thought that they would not able to recover their amount as the
economics condition of Japan was in no condition which worse the
condition of Japan
 Alteration to other world; The recession of Japan made think over every
country and it made them to be aware of such condition of economy. And
made them aware about the recession and they implemented their economy
polices in new and better as previous one .
 Supply of certain product stop: Due to economic failure in Japan the
industries which used to producecertain productlike car were unable to
producesuch car as lack of investment in their country and their bank was
not in condition provide loan them which stop supply of the product


24. 6.1 CONCULSION
We have seen how Japan has suffered during the 1990 periods problem has arisen
problems have arisen mainly from the aging population, ineffective fiscal policy,
and the allocation of transfers from the central government to local governments
that make up about 18% of total government spending. This high spending rate has
kept some sectors, such as agriculture, weak. Further structural problems have
arisen from the Basel capital requirements that made Japanese banks reluctant to
lend money to startup businesses and SMEs, thus discouraging Japanese
innovation and technological progress
Economic growth was further slowed by the high appreciation of the yen in the
mid-1990s, which caused Japanese manufacturing companies to move from Japan
to other Asian countries. Finally, wage increases also pushed Japanese companies
abroad, resulting in diminished domestic production
SUGESSTION FOR STIMULATING ECONOMIC GROWTH IN JAPAN
ARE:
(i) reform to combat the aging population;
(ii) reduction in the transfers from central to local governments;
(iii) diversification of households’ asset allocation;
(iv) reform of the agriculture sector;
(v) a review of asset management fees;
The experience of Japan after the “Lost Decade” should be a lesson for other
countries, including the PRC, the countries of the euro zone, and the US, to prevent
them falling into long-term recession and to encourage their economic growth.