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For a number of reasons japanese demand has stagnated

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Unformatted text preview: agement policies are nearly impotent, the alternative for the authorities may have to be to wait for an autonomous recovery that will follow from a stock adjustment. This is, in particular, the thesis advanced by Dominic Wilson in his contribution to this issue. For a number of reasons Japanese demand has stagnated or declined in the 1990s and it is highly unlikely that changed price expectations, whether working through lower real interest rates and/or more stable exchange rates, would be sufficient to revive it. The reasons for lower spending propensities lie on the household side with the future stringency of a lower-growth environment, and on the corporate side with the excesses of the ‘bubble’ period. Consumer sentiment has been negatively affected by the increasing gloom of official and private projections on longer-run growth. While in the early 1990s many forecasters still expected medium-term rates of expansion of the order of 3–4 per cent per annum, by the end of the decade these projections had come down to 2 per cent or even less. Combined wit...
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