Japanese Economy

Paper Summary:

This paper discusses the position of the Japanese economy, which is currently in its worst recession since World War II. The country's economy slowed dramatically in the early 1990s after the bubble economy of the 1970s and 1980s and has not yet recovered. The paper shows that Japan's subsequent problems include declining Gross Domestic Product (GDP), failed stimulus packages, banking inefficiencies, ineffective interest rate policies, deflation, currency devaluation, and Japan's aging population. Presently, its last bastion of hope, exports, are beginning to decrease. This paper argues, therefore, that Japan is not creditworthy. The paper includes a graph.

From the Paper:

"Although money in Japan is practically free, companies have no incentive to borrow and invest, and individuals would rather hold on to cash as prices decline. What's worse, the few companies that are actually borrowing money are using it to invest abroad. International investors are not making capital investment in Japan because they have no confidence in the economy. With no capital spending or investing within Japan, its economy continues to stagnate (Noah, 2002)."

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