Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
Japan’s Lost Decade: A Liquidity-Shock Induced Downturn
George Chacko and Carolyn L. Evans
The last century provides three important examples of a liquidity shock spiraling
into a full-blown macroeconomic crisis – the U.S. Great Depression, Japan’s
“Lost Decade,” and the U.S. “Great Recession.” Japan’s lost decade provides a
wealth of data and the benefit of 20 years of hindsight, and thus an ideal
opportunity for exploring how a liquidity shock can feed through to banks and
lead to a broad and deep economic downturn. We trace out the evidence for
interpreting Japan’s Lost Decade as the aftermath of a liquidity shock and show
how it led to many years of sluggish growth in Japan.
Key Words: Japanese economy, liquidity shock, Lost Decade, financial crisis

The authors are both from Santa Clara University, Santa Clara, CA 95053. Emails: gchacko@scu.edu,
clevans@scu.edu