Abstract
Since the asset price bubble in the early 1990s, the Japanese economy has been stagnant from 1991 to 2004 and the banking sector has also been in trouble; as several observers recently suggested, monetary policy has not been as effective in restoring growth. The government over the years resorted to an expansionary monetary policy along with an expansionary fiscal policy. It is a pity that these standard tools have failed to help the economy. The notion that an important part of the problem is the result of attempts to reallocate resources in the wake of falling expectations of future growth, suggests that lifting expectations of future performance could now play crucial role. If the government could restore faith in Japan’s performance, private spending could also be revived; hence structural reforms and rehabilitation of the banking sector have an important role to play.
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Notes
Hugh Patrick, The Causes of Japan’s Financial Crisis, AJRC Research Center, Canberra, 1999
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© 2005 Rameshwar Tandon
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Tandon, R. (2005). Japanese Banking and Finance in the New Millennium. In: The Japanese Economy and the Way Forward. Palgrave Macmillan, London. https://doi.org/10.1057/9780230513952_6
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DOI: https://doi.org/10.1057/9780230513952_6
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