ABSTRACT
In the early 1990s, the bubble which had built up in Japan's real estate and stock markets burst, ushering in a protracted period of economic malaise. The Japanese economy, despite concerted efforts to revive it with fiscal and monetary stimuli, failed to recover its previous vibrancy. Its lackluster performance has persisted for nearly two decades. The collapse of Japan's bubble economy had relatively few global ramifications; some considered the country's prolonged economic slump to be a malady specific to Japan. This assumption that Japan represents an exception is no longer valid. The collapse of Lehman Brothers in September 2008 revealed the true extent of a global crisis whose epicenter lay in U.S. financial markets. Unlike the bursting of the Japanese bubble, the reverberations of this collapse have been felt around the world, and the crisis has resulted in protracted downturns in a range of countries. At this point in time, it is difficult to assess the long-term consequences of the financial crisis; but if we are to draw lessons from Japan's experience, the fallout from the crisis could be evident for years to come.
