ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 661
In this paper, I analyze the causes of the prolonged slowdown of the Japanese economy in the 1990s and find that the stagnation of investment, especially private fixed investment, was the primary culprit. I then investigate the causes of the stagnation of household consumption during the 1990s and find that the stagnation of household disposable income, the decline in household wealth, and increased uncertainty about the future are among the contributing factors. Finally, I consider whether demand side factors or supply side factors were more important as causes of the prolonged slowdown of the Japanese economy in the 1990s and conclude that the former (especially misguided government policies) were probably more important.
Japan Japanese Economy Lost Decade Stagnation Slowdown Recession Deflation Economic Fluctuations Business Fluctuations Business Cycles Growth Economic Growth Gross Domestic Product GDP Investment Capital Formation Household Consumption Household Consumption Structure of Consumption Saving Household Saving Precautionary Saving Uncertainty Future Prospects Demand Side Factors Supply Side Factors