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Japan has underwent seven recessions in the past 20 years with an averaged growth of 0.8 percent per quarter, while China has continued to grow becoming the world’s second largest economy. Especially with the working population shrinking, Japan currently faces a crisis in its economy. With financially supporting a family becoming increasingly difficult with increasing prices, settling down and having kids are becoming less attractive to females. Thus with the fertility rates remaining low this means less consumption which will affect the slumping economy negatively. The government has tried to tackle this issue by paying for lip services that are involved in empowering woman but such effects can only be recognized in the long run. Thus the government has attempted an expansionary fiscal policy through increasing government spending in order to close the recessionary gap and move economy towards a full employment level of output however in order to promote a long run economic growth, I suggest Japan to adapt to a interventionist supply side policy in order to increase the productive capacity of the country. While this policy would require spending initially stimulating the demand if Japan can wellcraft this policy this should create an enduring expansion in the long run supply. Coming from Japan, I am deeply concerned for Japan’s economy because what the government decides to implement directly affects me.
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