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Financial Crisis Fatigue? Politics behind Japan's Post-Global Financial Crisis Economic Contraction

Published online by Cambridge University Press:  10 May 2013

SAORI N. KATADA
SAORI N. KATADA*
Affiliation:
Associate Professor, University of Southern California
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Abstract

Despite a relatively healthy financial sector, the Japanese economy contracted 6.3% in 2009 during the global financial crisis (GFC) after the Lehman shock, the starkest drop among the OECD countries. Since then, the Japanese economy has been slow to recover, although the Japanese government has implemented multiple economic stimulus packages with a high aggregate value.

By tracing the Japanese government's response to the GFC in the critical months of October 2008 through the end of 2009, this study argues that the Japanese government failed to manage the crisis decisively due to institutional constraints derived, ironically, from the experiences that Japan gained from a series of financial crises in the 1990s and 2000s. Financial crisis fatigue constrained the supply of Japan's fiscal and monetary measures against the GFC and slowed political response. Furthermore, it made Japanese society unresponsive to these measures.

Type
Research Article
Information
Japanese Journal of Political Science , Volume 14 , Special Issue 2: Japan's Crisis Management amid Growing Complexity: In Search of New Approaches , June 2013 , pp. 223 - 242
Copyright
Copyright © Cambridge University Press 2013 

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