ABSTRACT
The Japanese economic policy experience in the 1990s was the worst in the country for many decades. It was a result not so much of market performance as of policy failures by the government. After implementing a series of measures around 1990 that led the economy to a recession, it withheld critically important economic information from the public, such as the size of nonperforming loans held by financial institutions, while policy makers were waiting in vain for the economy to revive endogenously. Certainly there was no leadership in the political arena that would give direction to the bureaucratic decision-making process. Senior ministerial staff continued to make serious mistakes that were implicitly supported by politicians through their own nonaction. 1 The author shares the view of Posen (1998) that the major economic problems of Japan during the 1990s arose due to policy-making mistakes within the country. Once lauded for their wise judgments, Japanese bureaucrats are now viewed by many as having been motivated mainly by their own interests and by costly face-saving measures. 2
