Monetary Transmission at Low Inflation: Some Clues from Japan in the 1990s

Compared to its performance from the 1950s through the 1980s or to the U.S. economy in the 1990s, Japan's growth rate has been sluggish. Growth declined from an average of 10% for the mid-1950s to the early 1970s, to 4% for the 1970s and 1980s, to about 1% for the 1990s. For the first time since the very early postwar years, Japan's growth rate has been below U.S. growth for a protracted period. The convergence of the economies that had become a stylized fact of the postwar era has ended, at least temporarily.