Japan: Cut in Interest Rates is Not Enough.

This article presents information on the economic crisis in Japan. It is informed that the era of consistently high rates of economic growth in Japan is long past. Although Japan entered the year 2000 with a dynamic economic expansion, the economy ran out of steam soon afterwards. In the third quarter a marked decline in economic activity was recorded. According to the revised figures, gross domestic product declined by 0.6 percent on the previous quarter and is equivalent to an annualized figure of 2.4 percent. Japan has been confronted with a deflationary trend for many years now. In 2000 the consumer price index was once again on a declining trend, despite the rise in oil prices and the renewed depreciation of the yen. Japan has relied primarily on an expansionary fiscal policy in order to overcome the crisis. It soon became apparent that a one-off fiscal impulse was not sufficient to enable the economy to move on definitively to a new growth trajectory. As a result, continual supplementary budgets were adopted. Yet because private economic agents did not respond to these impulses, each time the effect swiftly burnt out.