OBJECTIVE

To study the Stagnant economy of Japan, its causes and effects and the policies
implemented to increase inflation.

INTRODUCTION
Between 1991 and 2003, the Japanese economy grew at a rate of only 1.14 percent per
year, and between 2000 and 2010, the average real growth rate was less than 1%, both
much below that of other industrialized countries. The Great Recession of 2008, the
2011 Thoko earthquake and tsunami, and the COVID-19 pandemic and subsequent
COVID-19 recession all wreaked havoc on Japan's economy.
TIMELINE
1979-1990 - Easy Monetary Policy led to asset bubble in Japan.
1990’s - Debt Deflation
2000’s - Quantitative easing
2008 - Global Financial Crisis
2010’s - Abenomics
Population Decline
 Unemployment Rate (%)
6.00%

5.40%
5.30%
5.10% 5.10%
5.00% 5.00%

4.70% 4.70% 4.70%

4.52%
4.40%
4.30%
4.10% 4.10%
4.00% 4.00% 4.00%
3.90%

3.60%
3.40% 3.40% 3.40%
3.20%
3.10%
3.00% 2.97%
2.90%
2.80%

2.50%
2.40% 2.40%
2.20%
2.10%
2.00%

1.00%

0.00%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: World Bank

 • Deflation in Japan’s occurred because of
decrease in Aggregate demand.
• In the long-term, deflation creates higher
rates of unemployment. In Japan as the
unemployment rate was 5.4% when deflation
CONCLUSION rose in early 2000s.
• It is very difficult for the economy to grow
without inflation.
• It is hard to create Inflation through
monetary policy when economy is in
deflation.
DATA SOURCES

• data.worldbank.org
• Bloomberg
• Money macro
• Wikipedia