The paper "Measures Taken to Reduce the Economic Problems of Inflation in Japan" is a perfect example of a macro and microeconomic case study. In 1992, the Japanese economy experienced a downturn that has come to be termed as the Heisei Recession. Since the start of the recession, the Bank of Japan (BOJ) and the government put in place measures that tamed inflation and ensured that the economy was relatively stable (Lincoln 2011, p. 353). However, in 1997, the economy experienced inflation with the key variables to economic growth experiencing a decline.
This paper discusses the Heisei Recession that started in 1992. The paper will review the factors leading to the recession and the measures that were taken to ensure economic prospects before the real slump of 1997 and after. Overview of the recession The Heisei era started in 1989 with high economic expectations. The main movers of the economy were the rapid growth in the real estate and stock markets. The growth rate had accelerated after 1985 and reached an annual average rate of 5%. This accelerated growth did not last for long; the period starting 1990 saw the key drivers of the economy plunge and a decrease in economic production was witnessed (Hamada 2003, p. 3).
The growth of any economy is, marked by having more workers, capital stock creation which is realised through factories, technological advancements and office building that all point to becoming more productive. This results in a country getting more from each worker. The workers serve as the unit of capital stock thus increased output points to economic growth. In the period between 1988-1993, the hour's workers worked per week went down from 44 to 40 hours.
This had a direct impact on the per capita income. With the eroding confidence in the economy during the period, the per capita continued which affected the economy (Hamada 2003, p. 4). In addition, the stock markets and the real estates were recording a sharp decrease. This meant that the players in the sectors could not service loans and most of the commercial banks were overwhelmed with the bad debts.
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