Post-Bubble Blues: How Japan Responded to Asset Price Collapse

Books, March 9, 2000

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Examines why Japan, once a leading economy, lagged behind other industrial countries after the late 1980s asset price bubble burst.
Focuses on causes of lingering economic problems, the crisis in the banking system, weak business investment, and the government's stimulus efforts.
Research prepared by members of the Japan team in the IMF during 1998 and the first half of 1999.
Message: "banking reform and corporate restructuring are central to any sustained revival of the economy."

Banking reform and corporate restructuring are central to any sustained revival of the economy.
The crisis in Japan's banking system was a central factor in prolonged weak performance.
Weak business investment contributed significantly to the slow recovery.
Government stimulus packages were deployed repeatedly to kick-start the economy.

The research provided the analytical framework for the IMF's policy advice during a period of rapid change, described as a period "during which macroeconomic policymaking moved into uncharted territory."
The volume presents detailed background research backing the core message on banking and corporate reforms.
Prepared by IMF Japan team members in 1998 and the first half of 1999.

Prioritize banking reform to restore financial sector health.
Implement corporate restructuring to remove impediments to investment and growth.
Use targeted policy advice grounded in detailed empirical research during episodes of systemic change.