A Review of the Japanese Studies on Japan's Deflation

The Japanese economy had climbed out of the recession since the beginning of 2002 but had nevertheless been confronted with deflation.The Japanese scholars have researched the problem of deflation from the perspectives of 1) whether or not economic growth should be taken into account when defining deflation;2) the causes of deflation from both the demand and the supply side.Specifically,the former involves the consequences of bubble economy,expectation of deflation,and the declining wages;the latter relates to the Japanese regulation reform and technological progress,the changing international labour costs and the yen appreciation stemming from the current account surplus,etc.;3) the formation mechanism of deflation,by citing classical theories of Marx,Keynes and Hayek;4) the effects of deflation including its consequences on the real economy,the intergenerational income transfer,and the employment environment;5) the control of deflation,which involves the adequate intensity of financial and fiscal policies,dealing with the deflation expectation,and the efficacy of government intervention.A thorough review helps to understand the deflation in Japan.