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Article: Japan's lost decade.(Japan: monetary and fiscal policies)
- Article from:
- The Economist (US)
- Article date:
- September 28, 2002
CopyrightCOPYRIGHT 2002 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Japan is not so much in a cycle as in a rut
THE annual growth rate in Japan has averaged less than 1% over the past ten years, compared with over 4% in the previous decade. The OECD estimates that Japan's output gap, a measure of spare capacity, is a modest 3% of GDP, but this assumes that its potential growth rate has fallen sharply along with its actual growth. If productivity growth had remained constant at its 1980-92 average, then Japan's output gap would now be a huge 18% of GDP (see chart 7). Assuming that the truth lies somewhere in-between, Japan has suffered the deepest slump in any developed economy since the Great Depression.
Japan's ...