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International Aspects of Japan’s Business Cycle

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Rocked by Southeast Asia’s economic crisis, Japan sank deeper into recession during 1998:IQ. Some economists believe the country’s modest inflation rate and corresponding low interest rates have actually hampered its recovery by eliminating a key channel through which monetary policy affects aggregate demand. Since it cannot force nominal interest rates below zero, an expansionary Japanese monetary policy might not affect consumption, investment, and savings decisions.


Suggested citation: “International Aspects of Japan’s Business Cycle,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-07, pp. 18-19, 07.01.1998.

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