What fiscal stimulus?

• Author: Nakamae, T.
• Position: OFF THE NEWS

The notion of fiscal stimuli in Japan during the 1990s is somewhat misleading. It is not so much that government spending was ineffective, but rather that it never actually existed, or at least not to the extent touted by the government. After the bursting of Japan's economic bubble, spending on public works increased from [yen] 7.0 trillion in fiscal year 1990 to [yen] 13.7 trillion in 1993. However, spending stopped increasing after 1994, even though successive economic stimulus packages were introduced until 2002. Public works spending fell to [yen] 9.2 trillion by 2002, down [yen] 4.5 trillion from its peak in 1993. In other words, the government did not pump as much money into the economy as their stimulus plans suggested.

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Excluding spending on...