Summer 2018 Econ 332: Analysis of the Japanese Economy

This report analyzes the Japanese economy, focusing on the article "WHERE IS THE JAPENESE ECONOMY HEADED" by Motomichi Ikawa (2005). It reviews Japan's economic stagnation in the 1990s, the bursting of the asset bubble, and the subsequent recovery efforts. The analysis covers the impact of globalization, deflation, and the East Asian economic crisis. The author highlights the sluggish economic performance, unsustainable recoveries, and increased public debt during the "Lost Decade". The report examines the improvements in the corporate and banking sectors since 2002, despite a "soft patch" recession in 2004. It also details policy objectives for overcoming deflation, promoting economic integration, and stabilizing the yen. The report further discusses uncertainties such as oil price increases and potential impacts of global events. It concludes by emphasizing the potential for long-term success if current policy efforts continue in the right direction. The report provides a detailed overview of the Japanese economy and the different policies taken by the government.

Running head: ANALYSIS OF THE JAPANESE ECONOMY
ANALYSIS OF THE JAPANESE ECONOMY
Name of the Student
Name of the University
Author Note

ANALYSIS OF THE JAPANESE ECONOMY
In the article titled “WHERE IS THE JAPENESE ECONOMY HEADED” which was
written by Motomichi Ikawa and published in the year 2005 aims to review the decade long
stagnation that Japan faced in the 1990s which was followed by asset price bubble collapse in the
late nineties (Ikawa, 2005). The paper then states how Japan recovered from the persistent
deflation after the government and management practices of the corporate giants took different
policies in boosting Japan’s economy. The author here aims to focus on the rebirth of the
Japanese economy after it had experienced “The Lost Decade” or a period of economic
stagnation.
The article here states that Japan’s economy was stagnated in the 1990s for a decade
following by the bursting of the bubble. It also stated that during globalization, Japan had an
adverse effect on the financial and capital market which resulted in deflation. The economic
crisis in the East Asia also had a negative impact on Japan. The author then focuses on the
experience faced by Japan during the lost period which includes sluggish performance of the
economy resulted from deflation, unsustainable recovery from time to time, and increase in debt
in the public sector. The author also claims that Japan’s economy started recovering since 2002
which resulted due to improved performance in the corporate sector and the banking sector
though, there had been a “soft patch” recession in 2004 (Ikawa, 2005). The paper then suggests
some policy objectives to boost the current situation of the Japanese economy like overcoming
deflation as soon as possible, promoting economic integration in order to maximize the benefit
from globalization, and stabilizing yen exchange rate against US dollar for a sustained recovery
of the economy. Maintaining the level of household consumption , strengthening government

ANALYSIS OF THE JAPANESE ECONOMY
reform efforts in order to reactivate private sector and improving the quality of labor force is
essential for raising the productivity of Japan.
The article provides knowledge of the Japanese economy. It also states some policy
objectives which would help in booming Japanese economy (Ikawa, 2005). The article made
detailed analysis of the Japanese economy and the different policies taken by the government. It
also states whether the different policy framework would help in revitalize the Japanese
economy. The paper further focuses on the greatest uncertainties which Japan could face such as
an oil price increase, bursting of the bubble in China or a major attack of terrorism could also
damage the Japanese business. The author in this paper clearly demonstrates what resulted the
stagnant economic growth of Japan and then how did it recovered with the improvement in the
banking sectors after the different policy efforts taken by the government and private sector.
Lastly, the author states that if the present policy efforts of the Government continue in the right
direction Japan will succeed in the long run.

ANALYSIS OF THE JAPANESE ECONOMY
REFERENCE LIST
Ikawa, M. (2005). Where is the Japanese economy headed?. Pacific Economic Review, 10(4),
493-514.