Sorry, no results found!



    Fiscal stimulus in Japan failed during the "lost decade" of the 1990s


    Japan’s economy lost ground in the 1990s when stimulus was removed

    Adam Posen, president of the Peterson Institute for International Economics, wrote in his 1998 book, Restoring Japan's Economic Growth, that "the 1995 stimulus package ... did result in solid growth in 1996, demonstrating that fiscal policy does work when it is tried. As on earlier occasions in the 1990s, however, the positive response to fiscal stimulus was undercut by fiscal contraction in 1996 and 1997." He concluded:

    Similar contractions undertaken both openly and by hidden means in 1994, 1996, and 1997, with reference to announced but unimplemented spending, had destructive effects. Future government packages must recognize that when the Japanese government paid for fiscal stimulus in 1995, it got economic growth, and that when it mistakenly pursued fiscal austerity in most of the remainder of the 1992-97 period, it got economic contraction.