“Lost Decade” in Translation - What Japan’s Crisis could Portend about Recovery from the Great Recession
IMF Working Papers, December 1, 2009
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Bibliographic details
- Authors: Kiichi Tokuoka, Murtaza H Syed, Kenneth H Kang
- Published: December 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874273.001
Overview
- Authors: Kiichi Tokuoka, Murtaza H Syed, Kenneth H Kang
- Publication date: December 1, 2009
- Series: Working Paper No. 2009/282
- Issue: 282
- Volume: 2009
- Pages: 40
- DOI: https://doi.org/10.5089/9781451874273.001
- Stock No: WPIEA2009282
- ISBN: 9781451874273
- ISSN: 1018-5941
- Subject tags: Banking, Credit, Distressed assets, Financial statements, Public debt
- Keywords: banking system, central bank, financial crisis, money market, public funds, WP, zero interest rate policy
Core question and approach
- Primary question: Is the recovery from the global financial crisis now secured?
- Approach: Explore parallels between the global financial crisis and the crisis that stalled Japan's growth two decades earlier to draw implications for the global outlook and policy.
Key findings (Japan’s experiences and implications)
- Green shoots do not guarantee a recovery, implying a need to be cautious about the outlook.
- Financial fragilities can leave an economy vulnerable to adverse shocks and should be resolved for a durable recovery.
- Well-calibrated macroeconomic stimulus can facilitate adjustment, but carries increasing costs.
- Judging the best time to exit from policy support is difficult; clear medium-term plans may help.
Policy implications and recommendations
- Exercise caution in interpreting early signs of recovery ("green shoots") when assessing the durability of a rebound.
- Prioritize resolution of financial fragilities to reduce vulnerability to adverse shocks and support a durable recovery.
- Use macroeconomic stimulus in a well-calibrated manner recognizing that benefits may diminish while costs increase over time.
- Develop and communicate clear medium-term exit plans from policy support to aid credibility and facilitate eventual normalization.
Additional publication notes
- This Working Paper should not be reported as representing the views of the IMF. The views expressed are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress and are published to elicit comments and further debate.
Source: IMF Working Paper “Lost Decade” in Translation - What Japan’s Crisis could Portend about Recovery from the Great Recession, Kiichi Tokuoka, Murtaza H Syed, Kenneth H Kang, December 1, 2009.