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Deflation in Japan

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22 views11 pages

Deflation in Japan

Uploaded by

shihab11e
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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DEFLATION IN

JAPAN
By: Shihab, Ali, Ayesha, Ahmed
What is deflation?

INTRODUCTION Japan’s past


+ encounters with
AGENDA deflation in history

Causes and effects


of deflation
160 70

140 60

120
50

100
40
80 WHAT IS
60
30
DEFLATION?
20
40

20 10

0 0
05/01/20YY 06/01/20YY 07/01/20YY 08/01/20YY 09/01/20YY

Volume Close
D E F L AT I O N I S A FA L L I N T H E OV E RA L L
LEVEL OF PRICES IN AN ECONOMY
AND AN INCREASE IN THE
P U RC H A S I N G P O W E R O F T H E
C U R R E N CY , D E F L AT I O N I S U S U A L LY
A S S O C I AT E D W I T H A C O N T RAC T I O N
I N T H E S U P P LY O F M O N E Y A N D
C R E D I T , B U T P R I C E S C A N A L S O FA L L
DUE TO INCREASED PRODUCTIVITY
A N D T E C H N O LO G I C A L
I M P R OV E M E N T S . W H E T H E R T H E
ECONOMY, PRICE LEVEL, AND MONEY
S U P P LY A R E D E F L AT I N G O R I N F L AT I N G
CHANGES THE APPEAL OF DIFFERENT
INVESTMENT OPTIONS.
JAPAN’S PAST
ENCOUNTERS
WITH
DEFLATION
IN HISTORY
JA PA N E X P E R I E N C E D A
D I F F I C U LT T I M E D U R I N G
THE 1990S KNOWN AS THE
" LO S T D E C A D E " A S A
R E S U LT O F T H E
BREAKDOWN OF AN
ECONOMIC BUBBLE.
D E F L AT I O N B E C A M E A N
ISSUE AS THEIR ASSET
PRICES FELL. IT ALSO LED
TO THE BANKING CRISIS,
W H I C H H A D A N I M PAC T O N
BO T H C O N S U M E R
SPENDING AND
I N V E S T M E N T. E V E N
T H O U G H T H E G OV E R N M E N T
U S E D M E A S U R E S L I K E LO W
I N T E R E S T RAT E S A N D
S T I M U LU S PAC KAG E S , I T
WA S E XT R E M E LY D I F F I C U LT
F O R T H E G OV E R N M E N T T O
ESCAPE THE CRISIS. THE
ENTIRE EXPERIENCE ENDED
U P D E F I N I N G JA PA N ' S
LO N G -T E R M E C O N O M I C
CAUSES
OF DEFLATION
FOR JAPAN
O V E R T H E PA S T F E W Y E A R S D E F L AT I O N H A S
H I T J A PA N H A R D , T H E C A U S E S O F D E F L AT I O N
I N J A PA N A R E M U LT I FA C E T E D , W I T H VA RY I N G
P O L I C I E S S O M E O F T H E C A U S E S O F D E F L AT I O N
I N J A PA N A R E A S F O L LO W S : F I R S T LY , J A PA N
H A S O N E O F T H E O L D E S T P O P U L AT I O N S I N
THE WORLD LEADING TO A DECLINE IN THE
W O R K I N G P O P U L AT I O N W H I C H R E S U LT E D I N
C O N S U M E R S U R P LU S . S E C O N D LY , J A PA N ’ S
B I RT H RAT E S A R E D E C L I N I N G RA P I D LY W H I C H
C O N T R I B U T E S T O S H R I N K I N G P O P U L AT I O N , I N
W H I C H S M A L L E R W O R K F O RC E L E A D S T O
DECREASED DEMANDS OF GOODS AND
S E RV I C E S . T H I R D LY , J A PA N H A S H I G H L E V E L S
OF PUBLIC DEBT WHICH CAN SUPPRESS
D E M A N D A N D L E A D T O D E F L AT I O N . L A S T LY ,
T H E T E C H N O LO G I C A L A D VA N C E M E N T S M A D E
I N J A PA N L E A D T O J O B D I S P L A C E M E N T A N D
DECREASED DEMAND IN GOODS AND
S E RV I C E S .
EFFECTS OF
DEFLATION ON
JAPAN
THANK YOU

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