Recently various commentators have been
warning Euro-zone policymakers that they needed to boost stimulus policies in
order to avoid a Japanese-style lost decade. To support their case, they point
to the years 1991 to 2000. The average growth of real GDP in Japan during that
period stood at 1.2 percent versus the average growth of 4.7
percent during 1980 to 1990. In terms of industrial production, the average
growth stood at 0.1percent versus 4.1 percent.
According to many experts such as Fed
Chairman Ben Bernanke, an important factor behind this sharp weakening in
Japan’s economic growth is the steep decline in the yearly rate of growth of
the consumer price index (CPI). During the 1980 to 1990 period, the average
rate of CPI growth stood at 2.6 percent against 0.8 percent
during the 1991 to 2000 period. Note that from February 1999 to December 2000,
the CPI rate of growth displayed persistently negative growth, i.e., price
deflation…To Read More….
No comments:
Post a Comment