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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
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This note was uploaded on 02/03/2014 for the course ECON 204 taught by Professor Devero during the Summer '13 term at American University of Sharjah.
- Summer '13