In this paper, I show that Japan will not be able to have a viable banking sector without stopping deflation. The banking industry has not shown a profit since fiscal 1993 (ended March 1994) if one excludes capital gains from stock and real estate portfolios. I quantify the financial condition...

In order to maintain the stability of its financial system, Japan must control its budget deficit by continuing with a contractionary fiscal policy. Ideally, the negative effects of a tight fiscal policy should be countered with an expansionary monetary policy. However, the effectiveness of the...

Japan's dramatic transformation from economic success to economic stagnation offers important policy lessons to advanced countries everywhere that are struggling with stagnation. The term 'Japanization' is often used by economists to describe long-term stagnation and deflation. Symptoms include...