Title: Japanese Recession - Wikipedia
Headings: Japanese Recession
Japanese Recession
Contents
Cause
Effect
Steps towards improvement
See also
References
Bibliography

Content: Finally, in October 2000, Japan announced yet another fiscal stimulus package of 11 trillion yen. Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen, and each failed to cure the recession. What the spending programs have done, however, is put Japan's government in poor fiscal shape. The "on-budget" government spending has caused public debt to exceed 100 percent of GDP (highest in the G7), and even more debt is apparent when the "off-budget" sector is included. Japan's expansionary monetary policy failed to achieve recovery. From a high of 6 percent, the discount rate has been lowered to 4.5 percent in 1991, 3.25 percent in 1992, 1.75 percent during 1993–1994, and 0.5 percent during 1995–2000. This dramatic easing of interest rates has not stimulated Japan's economy, but the failure of interest-rate easing is not necessarily a failure of monetary theory. Japan's banking system is widely regarded as in need of restructuring. Much of the stimulus that reduced rates could provide has not been realized because the banking community has been increasing its liquidity instead of increasing its lending. Many banks have bad loans with collateral now worth only 60–80 percent of their value when the loans were made.