Becoming an Economist: Analysis of Current Economic State of Japan

Running head: BECOMING AN ECONOMIST
Becoming an Economist
Name of the Student
Name of the University
Course ID

BECOMING AN ECONOMIST1
Table of Contents
Introduction......................................................................................................................................2
Theoretical Background...................................................................................................................2
Output performance.....................................................................................................................3
Price level....................................................................................................................................4
Labor market................................................................................................................................4
International trade........................................................................................................................5
Analysis of current economic state of Japan...................................................................................5
Performance analysis of Real GDP.............................................................................................5
Performance analysis of Inflation................................................................................................6
Performance analysis of Unemployment.....................................................................................7
Performance analysis of Trade....................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

BECOMING AN ECONOMIST2
Introduction
Japan is recognized as a highly developed country following principles of market
economy. When compared in terms of computed nominal GDP, Japan’s economy is considered
as third largest. In terms of GDP adjusted for purchasing power parity, the economy is fourth
largest. The economy has made considerable economic progress and become second largest
developed economy in the world. Japan is one vital member of G7 countries. Japan has the
world’s largest automobile and manufacturing industry. The faster industrial development in
Japan is mainly due to rapid progress in the field in technology and innovation. The country has
taken different measures for filling global patent. The nation experienced an economic bubble in
the second half of 1980 following rising prices of stock and real estate (Huber 2019). The period
of 1990s was a lost decade for the nation and the economy grew at a much slower pace in
relation to global economic growth. The economy however still recovered at a faster rate and
manage to account a higher growth in per capita GDP from 2001 to 2010. The paper makes an
economic analysis of current state of Japan’s economy taking into consideration macroeconomic
data related to output, price level, labor market and international trade.
Theoretical Background
Performance of a country depends on performance of the nation in various dimension.
Important aspects that needs to be considered in this regard include performance of aggregate
output, labor market, price level, international trade and others (Sowell 2014). Performance in
each of these dimensions again are measured using different indicators. For example, output of a
nation is measured using the composite measure of Gross Domestic Product (GDP). In
estimating trend movement in price level, the used measure is rate of inflation. Analysis of labor
market performance is done by examining the movement of unemployment rate of the nation

BECOMING AN ECONOMIST3
(Sloman and Wride 2015). For an open economy, a significant contributor to economic
performance of the nation is performance in international trade measured by net trade balance.
Each of these indicators has its own significance in portraying state of the economy for the
chosen period.
Output performance
Commonly used measure for identifying economic performance of a nation is Gross
Domestic Product for a particular accounting period. GDP is used as a reference for evaluating
health of domestic and international economies. It actually represents values of all the produced
goods and services within the national boundary by monetary terms. Goods included in GDP
estimation are those exchanged by final producers and final users (Assa 2016). GDP of a
particular year when compared with previous period indicates whether the nation is expanding in
terms of producing more goods and services or the economy is contracting by producing less
goods or services. In estimating monetary values of goods and services, respective market prices
need to be used. In doing so, either market price of current year or market price of a pre-
determined base year is used. GDP estimated at current year market prices is called nominal
GDP. Computed GDP at the fixed base year prices is known as real GDP. Since real GDP is free
from inflationary impact provides a closer estimate of aggregate output (Ramasamy and Abar
2015). Growth in GDP measures how fast the output is changing. Higher the rate of growth in
GDP, faster is the economic growth and vice versa. Real GDP growth rate is computed as a
percentage change in real GDP from one year to next. Another related measure of GDP
indicating standard of living within the nation is the per capita GDP. Per capita GDP is computed
as total GDP divided by total population. Higher per capita GDP implies a higher average