Why is Japan's growth rate negative?Edit
Answer by Balaji Viswanathan:
- Japan is going through a demographic disaster. Its working age population is rapidly falling. When population falls without a corresponding increase in productivity, GDP falls. GDP is essentially population * productivity.
2. Excessive spending binge of the past. To protect its banks from the financial crisis of early 1990s, Japanese government engaged in an unprecedented money expansion binge. Look at the top curve. They make even the Italians look like responsible spenders.
3.– Due to the very slow moving nature of the crisis and recovery, two generations of Japanese graduated out of college with no good jobs. If you don't get good jobs in the first decade post-college, you are practically lost forever, as companies would hire younger people for entry-level jobs and will not give you experienced jobs either.