2009 Reports

The Yen and Japan's Economy, 1985-2007

Obstfeld, Maurice

In the late 1980s, Japan’s economy embarked on a period of rapid escalation in the prices
of shares and real estate. This “bubble economy” was followed by a collapse in asset
prices, a reduced pace of real economic growth, banking problems, and deflation. Nearly
two decades after the demise of the bubble economy, the prognosis for Japanese growth
remains uncertain amid a turbulent global economic outlook. Japan’s experience carries
lessons for those hoping to understand and contain the current financial crisis originating
in the United States housing market.