Title: The Lost Decade: Lessons From Japan's Real Estate Crisis
Headings: The Lost Decade: Lessons From Japan's Real Estate Crisis
The Lost Decade: Lessons From Japan's Real Estate Crisis
What Was Japan's "Lost Decade" Real Estate Crisis?
Understanding Japan's "Lost Decade" Real Estate Crisis
Japan's Lost Decade
Key Takeaways
The Bank of Japan's Interest Rate Mistakes
A Liquidity Trap
Breaking Out of a Liquidity Trap
Credit Crunch
Solutions to a Credit Crunch
Article Sources

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Key Takeaways
Japan's "Lost Decade" was a period that lasted from about 1991 to 2001 that saw a great slowdown in Japan's previously bustling economy. The main causes of this economic slowdown were raising interest rates that set a liquidity trap at the same time that a credit crunch was unfolding. The major lessons economies can take from Japan's "Lost Decade" include using available public funds to restructure banks' balance sheets and that sometimes the fear of inflation can cause stagnation. Japan's equity and real estate bubbles burst starting in the fall of 1989. Equity values plunged 60% from late 1989 to August 1992, 2 ﻿ while land values dropped throughout the 1990s, falling an incredible 70% by 2001. 3 ﻿ (To read more about bubbles, see Economic Meltdowns: Let Them Burn Or Stamp Them Out? and Why Housing Market Bubbles Pop .) The Bank of Japan's Interest Rate Mistakes
It is generally acknowledged that the Bank of Japan (BoJ), Japan's central bank, made several mistakes that may have added to and prolonged the negative effects of the bursting of the equity and real estate bubbles. For example, monetary policy was stop-and-go;