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BY GROUP NO. 4

Japan: Deficits, Demography, and Deflation

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Road map

Introduction : by ManishFruits of the miracle ,Nixon and oil shocks by: ManishEnduka and The Bursting Bubble and

globalization : by MayankHashimoto’s legacy : by SaketJapan’s demographic crisis : by Saket Japan’s Pension System and Problem : By

Sunil

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Cont……

The Koizumi Reforms : By PrateekBOJ quantitative easing policy, Banks and

bank lending : By PrateekPension reform, fiscal reform : By AshishPrivatization of postal servicesTakenaka’s challengesGraphicConclusion

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Introduction

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Fruits of the miracle ,Nixon and oil shocks

In 1971 to 1991 Japan’s average annual GDP growth rate was 4.4%

After 1991 its average annual GDP growth rate was less than 2%

Richard Nixon ended the Bretton Woods system of fixed exchange rates

In 1973 , the first oil shock hit the world economy

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Enduka and The Bursting Bubble and globalization

After oil shocks, exchange rate effect, Japan’s aggressively reinvest in modern plant and equipment

Japanese invested in their stock market, foreign equities, real estate, and foreign debt

After Enduka, Bursting Bubble happened in Japan’s and price of land fell by 85%

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Hashimoto’s legacy

Hashimoto head of the LDP’s, continue play a role in effecting the structural reforms of his 1996 agenda

In January 2001, the number of ministries was consolidated from 21 to 11

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Japan’s demographic crisis Japan’s child birth, fertility rate declineMortality rate increase Japan’s labor force shrinkJapanese worried about maintaining the

sort of skilled workforce that Japan needed or advanced manufacturing and services

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Japan’s Pension System and Health care System

The basic pension system was financed by a fixed amount of insurance premiums

There were two types of supplemental corporate pension plans

Employees pension fundDefined-benefits corporate pensionIn health care programs, private employees,

public employees, teacher, farmers, and self-employed people, virtually all Japanese were insured

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Problem

Increase in the rate of retirementNot fully fundedNeeded periodic adjustments

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The Koizumi Reforms

Four part of economic 1. Privatization 2. To write off the banks 3. Structural reforms4. Issuing governments bond

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BOJ quantitative easing policy, Banks and bank lending

Non performing loansFully utilize the council on economic and

fiscal policyNew century restorationBanks and bank lending

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Pension reform, fiscal reform

Koizumi increase government contribution in retired people pension fund

Government increase monthly contribution from Yen 13,300 to 16,900

Japan have serious deficit problemGovernment holding spending constant and

raising taxes, to balance fiscal deficit

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Privatization of postal services

Japan’s government privatizing Japan post in 2007, because postal service make more profitable for public

Postal service break into four part1. Post office management2. Mail delivery 3. Bank4. Insurance Post office and mail delivery control by

government and bank or insurance will open to private sector

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Takenaka’s challenges

Takenaka’s worried about budget deficits, public debt, the consequences of japans current surplus and the exchange rate of Yen

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Graphic

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Conclusion

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