Abstract
This paper analyses the causes behind the Japanese economic downturn which started in the 1990s and investigates the failure of both fiscal and monetary policy to remedy the recession. The author asserts that the Japanese economy was due for recession when two factors occurred to precipitate it, the asset price bubble and the banking crisis. However, a recession would have occurred even if these events had not transpired, because of a number of structural factors. The recession was then prolonged by the existence of the "liquidity trap". The inevitability of the recession stems from the fact that the Japanese economy had outgrown its entire modus operandi. The previous economic structure was one that produced for the purpose of exporting. However, a higher yen and declined profitability reduced Japan's ability to export. Local markets could not absorb the excess capacity because of high savings rates and an aging population. Producers became unable to remain competitive given the glut of over-investment and the rigid labour market, caused by a corporate culture dedicated lo protecting labour rights. The Japanese case exhibits that the unique structural and social aspects of an economy can often come to dominate or overwhelm even the best intentions of policy makers. Japanese policy makers were too preoccupied with traditional economic theory to envisage an alternative solution. Japan's unique cultural and institutional aspects combined to nullify otherwise viable macroeconomic policy.
School
School of Business
Department
Economics Department
Degree Name
MA in Economics
Date of Award
2-1-2006
Online Submission Date
1-1-2005
First Advisor
John W. Salevurakis
Document Type
Thesis
Extent
124 leaves
Library of Congress Subject Heading 1
Recessions
Rights
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Recommended Citation
APA Citation
Mowafy, Y.
(2006).An exploration of structural, cultural and institutional factors behind the Japanese recession, 1990-2000 [Thesis, the American University in Cairo]. AUC Knowledge Fountain.
https://fount.aucegypt.edu/retro_etds/1932
MLA Citation
Mowafy, Yasmin Ahmed. An exploration of structural, cultural and institutional factors behind the Japanese recession, 1990-2000. 2006. American University in Cairo, Thesis. AUC Knowledge Fountain.
https://fount.aucegypt.edu/retro_etds/1932
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Call Number
Thesis 2005/88
Location
mgfth;mrs2