Book Report

Blowing that Bubble : Review of Yoshikawa s japan s Lost DecadeWith his onerous heretofore insightful analysis , Tokyo University Economics Professor Hiroshi Yoshikawa comprehensively apologises in his book Japan s Lost Decade (2001 ) how the manhood s second largest economy has stagnated in the 1990s and the difficult choices Japan confronted at this crucial moment of transition . After the latch on of the babble economy of the late 1980s , the 1990 s ushered in with a bleary phenomenon tagged as the Japan s lost decennium . Since this has been one of the most extraordinary economic phenomena , no another(prenominal) country has moved so quickly from the top to the keister of the world s economic product leagueWhat could be the possible causes of the yen stagnation of Japan during the 1990s ? Since the bubbles burst , economists control cogitate on the financial problems . A fall in plus prices allegedly had the negative wealth effect on kin consumption . Through deterioration of collateral , it also break enthronisation of small firms . And banks suffering from corked loans became reluctant to stain new loans (kashi-shiburi , and further depressed investment . Three factors deal been pointed out to be the main causes of the lost decade , videlicet , the structural decline in labor input growth (Yoshikawa described the labor market in the ice eon , slowdown of the scarcity of demandIn addition , the characteristics of the early stages of Japan s bubble economy saw the rise in shore up prices , the pass judgment of increases differed greatly depending upon the land use (commercial , residential or industrial ) and the location (major population centers such as Tokyo , or elsewhere .

In other words , land prices were control up because of increasingly brisk investment in land by companies , particularly by medium-sized and small non-manufacturing firms , due to rises in expected rates of returns from land in commercial areas in Tokyo , and partly because of erroneous measures implemented by the disposal , and were not closely related to interest rates . These companies bought up land using funds borrowed from banks , so after the disrupt of the bubble economy , their financial state deteriorated drastically and the loans became bad debtsBy providing an overview of the Japanese economy , Yoshikawa elaborated the extremely poor cognitive operation of corporate investment is the most important factor to explain the long stagnation of the Japanese economy during the 1990 s . Another doubt that we could draw out in the book is why investment stagnated during that time . The popular answer is a credit crunch caused by bad loans banks hold . There is a neat consensus that the effect of credit crunch is much(prenominal) more severe on investment of small firms than that of large firms because large firms have better access to capital marketsOn the other hand , much controversy is bared as two assemblys have differing views on the real causes of the lost decade A group of scholars attributes the queer performance to a lack of effective demand and a liquidity trap caused by deflation , while another group points out that...If you want to get a full essay, assure it on our website: Orderessay

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