In this case we get an entire scenario about how the Japan deflation set in, what were the effects of the deflation on the economy as well as on the people of Japan. It also mentions about the various reasons because of which Japan was in such a tight grip of Deflation, Depression, Demographics and Debts Guides us through the steps taken by the government in order to curb this deflation. Imparts a great knowledge to us about the various economic terms like deflation, self-liquidating credit, Non-Self Liquidating Credit and how the people and economy of a country is affected by these.
Free markets economies are subject to cycles. Economic cycles consist of fluctuating periods of economic expansion and contraction as measured by a nation 's gross domestic product (GDP). The length of economic cycles (periods of expansion vs. contraction) can vary greatly. The traditional measure of an economic recession is two or more consecutive quarters of falling gross domestic product. There are also economic depressions, which are extended periods of economic contraction such as the Great Depression of the 1930s.
From 1991 through 2001, Japan experienced a period of economic stagnation and price deflation known as "Japan 's Lost Decade." While the Japanese economy outgrew this period, it did so at a pace that was much slower than other industrialized nations. During this period, the Japanese economy suffered from both a credit crunch and a liquidity trap.
Japan 's Lost Decade
Japan 's economy was the envy of the world in the 1980s - it grew at an average annual rate (as measured by GDP) of 3.89% in the 1980s, compared to 3.07% in the United States . But Japan 's economy ran into troubles in the 1990s. From 1991 to 2003, the Japanese economy, as measured by GDP, grew only 1.14% annually, well below that of other industrialized nations. The causes of Japan’s slow growth in the following sections, but it are worth mentioning here that the slow growth started in