...from Japanese Bubble 1. Easy monetary policy works, but there are risks in the exit. The Federal Reserve’s quantitative easing measures over the past few years have allowed the U.S. economy breathing room to get back on its feet after the worst downturn since the Great Depression. But there are risks that still lurk. If policymakers increase taxes too soon, or if they read the recovery prematurely, they could put the still-tentative U.S. economic recovery in real danger, Goto said. “It’s difficult to measure whether this economic recovery has legs or not,” she said. “In hindsight, the BOJ had misread a lot of the performance of the Japanese economy, and had toyed with the idea of ending that gush of money. What Abenomics has been able to do is to turn back on the spigot,” she said, referring to the current Japanese Prime Minister Shinzo Abe’s plan to breathe life back into Japan. “Japan should have been doing that a lot earlier, so that a comeback could have been easier,” Goto added. “We can learn from that." 2. You can’t divorce financial markets from ‘Main Street’s challenges. Consider what has happened in Japan in recent months. After two decades of subpar performance, the stock market there staged a sharp rally last year, tacking on gains of about 50 percent in roughly 13 months. Japanese stocks took off because of an aggressive round of new easing that was the first part of Abenomics. But what came next was an increase in the consumption tax in an effort to narrow...
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...The Japanese Economy Tanya Savage Pennsylvania College of Health Sciences The Japanese Economy This paper will analyze the economy of Japan including its people, geography and of aspects of the economy. Japan is a country that is located on a Pacific Ocean island on the eastern side of Asia (Gao, 2001). It stretches from Taiwan and East China Sea to the sea of Okhotsk in the north of Japan. Japan has a population of 126 million within its capital city; Tokyo having a population of 30 million, thereby making Japan the tenth most populated country in the globe (Flath, 2005). In total, Japan contains 6,852 islands with four major islands making up 97% of the total land area. This islands include Hokkaido, Shikoku, Honshu, and Kyushu (Alexander,2003). There is no particular official language and the recognized regional languages include Aynu itak, Eastern Japanese, Ryukyuan languages, and Western Japanese (Flath, 2005). The government of Japan is a unitary parliamentary constitutional monarchy, where the emperor is called Akihito and the prime minister is called Shinzo Abe. Japan is the second largest developed country, the third largest economy in the globe in terms of nominal GDP, and fourth largest in terms of purchasing power. In addition, it is the leading creditor nation in the globe (Alexander,2003). Based on these facts, Japan is part of the Group of Eight. Japan has the largest industry of electronics in the globe and also the third largest manufacturing industry of...
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...The Rise (and Fall) of the Japanese Yen Lawrence Cifarelli III, Nazanin Ershad, Natthima Sonsoem, Anyesha Mahaptra University of New Haven Abstract This Case study provides an insight to the fluctuations experienced in the currency of Japan, Yen from the late 1990’s to recent years. Japan follows the floating currency monetary policy due to which there is no measures taken on to control the fluctuations. Japan experienced magnificent growth through the 60's, 70's, and 80's leading into the 90's beginning. In the late 1990's, Japan’s economy marked its growth significantly slower, which had then come to be known as the 'lost decade' due to Japanese Asset Price bubble that collapsed. Eventually the nation faced major issues regarding environmental disasters, hollowing out of industries, etc. The past events which have caused the rise and downfall of Japanese Yen has been illustrated for examining the causes of the appreciation and depreciation of this currency. The influence of this floating currency on Japan's economy has been depicted in this case study. This paper also provides some applications of the measures that can maintain the stability of the Japanese Yen. Japan experienced tremendous growth throughout the 1960s, 1970s, and 1980s leading into the leading into the early 1990s. After World War II, Japan underwent a period of restoration followed by the events in 1978 where Japan excelled as a manufacturer partnering with the United States which helped to make its...
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...Prime Minister Abe strongly appealed to the global media his intention towards reforming Japans current economy and to be released from the long lasting recession that has been tormented the lives of the citizens. In the OECD Ministerial Council Meeting that was held on May 6th, he explained the source of Japans hardship lays within the 20years of deflation. This long lasting deflation has begun since the latter half of the 1990s. Inflation expectations fell, resulting a negative output gap and other factors such as a decline in import prices and a rise in interest rates occurred since then until now. The definite cause for the continuation of deflation is that consumers rejected to pour money in to the economy, saving what little money they had. In order to encourage citizens to put more money in to the market, governments took countermeasures such as handing out a portion of money to each and every family, however this policy ended up being useless. Staring from April, Abe launched one of his “three arrow” policy and raised the consumption tax from 5% to 8% and will eventually rise to a 10% tax rate. Also, there is even a theory that mentions the decrease in the number of children is the direct cause of deflation. Abe wishes to build a new economic order with the EU and at the same time promotes political measures to eliminate tariffs between countries for free trade. He states that by executing free trade by setting up a rule that is fair for all states, we can create a vigorous...
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.... In the 1980s Japan was viewed as one of the world’s most dynamic economies. Today it is viewed as one of its most stagnant. Why has the Japanese economy stagnated? The Japanese has stagnated due to Japanese banks. The banks over lent, made it easy to borrow and in turn created bad debt, it make it difficult to replace the money borrowed and cause a deficit causing the deflation in the country. “The Nikkei average plunged from nearly 39,000 points in December 1989 to about 14,300 points in August 1992, thereby losing about 60% of its value. As a result, investors lost the equivalent of (U.S.) $2 trillion and property values plummeted by about $10 trillion. Property values in certain parts of the country declined by 70% and plunged Japan into a deep recession for 10-years.” (Alston, 2013) To summarize the stock market collapsed, property prices dropped, banks curtailed the easy lending practices the created the economic boom, consumer spending halted- recession created, deflation, and the Japanese government was unsuccessful 2. What lessons does the history of Japan over the past 20 years hold for other nations? What can countries do to avoid the kind of deflationary spiral that has gripped Japan? Other nations can learn from what happened with Japan. Strict lending practices should have been in place to begin with, this would help decrease the amount of bad debt. The Government need to watch its spending. Japan is stuck because its debt is so high, it is extremely...
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...end of the 20th Century, Japan was officially recognized as an economic superpower throughout the world. However, growth never lasts forever and by the 1990s, Japan’s economy had come to a grinding halt due to a massive collapse in both the real estate and stock markets of the Japanese economy and remains in a recession that has lasted till now. As Japan looked to face another year of stagnant growth of the economy, Japan’s Prime Minister, Shinzo Abe, decided enough was enough. With the assistance of the new governor of the Bank of Japan, Shinzo Abe embarked on a radical economic plan that focused on three arrows of design. The arrows depict the strategy of Shinzo Abe’s “Abenomics” program in which it focuses on fiscal stimulus, monetary easing, and structural reforms. (International Monetary Fund 2013) It is almost near the two year mark since the implementation of Shinzo Abe’s “Abenomics” program has begun. Although typically, economic effects of governmental policies require years to fully see the effects, “Abenomics” was designed as a jumpstart program with future decisions dependent on the immediate aftereffects of implementation. With the initial completion of the first two arrows of the “Abenomics” economic program and the implementation of the third arrow of structural reforms of the Japanese economy, labor, and tax...
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...Japan’s Economic Malaise In 1989 Japan was widely viewed as an economic super-power. After three decades of robust economic growth it had risen to become the world’s second-largest economy. Japanese companies seemed to be obliterating entire American industries, from automobiles and semiconductors to earthmoving equipment and consumer electronics. Japanese companies were buying assets in the United States, including movie studios (Universal Studios and Columbia Pictures), golf courses (Pebble Beach), and real estate (the Rockefeller Center in New York). The stock market was booming, the Nikkei index hitting an all-time high of 38,957 in December 1989, an increase of more than 600 percent since 1980. Property prices had risen so much that one square mile of Tokyo was said to be worth more than the entire United States. Books were written about the Japanese threat to American dominance. Management theorists praised Japanese companies for their strategic savvy and management excellence. Economists were predicting that Japan would overtake America to become the world’s largest economy by 2010. It didn’t happen. In quick succession the stock market collapsed and property prices rapidly followed it down. Japanese banks, which had financed much of the boom in asset prices with easy money, now found their balance sheets loaded with bad debt, and they sharply contracted lending. As the stock market plunged and property prices imploded, individuals saw their net worth shrink. Japanese...
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...Michelle Corniciuc | A New House | Decision | 9/30/2012 | It is always a better idea to purchase your own home rather than pay for someone else’s with your rent payments. Owning an asset in the long run is better than a lease. There are many variables to consider before making your final decision. We as Americans find home ownership to be a valuable goal. Even this year’s national elections are using real estate as one of the most important issues. So, the decision to purchase a home is based on our country’s economy as well as your own. Of course the location of the real estate is a factor as well as the size of the lot and the condition of the building. What would you be willing to trade off or give up for the privilege of being the owner of your own home? What do you get in return for these tradeoffs? Now you must use the principles of economics to figure out some of the answers to your questions. You may have to use what you have available in savings to make a down payment and you may have to work more hours to afford your payments. In the long run you are placing all of those finances back into a type of savings for yourself and your family. These are only marginal changes that you will have to make. They are only small incremental adjustments that would be made to an original plan of action. Some people may find purchasing a new home a frightening experience. Spending your savings, moving into a new neighborhood, can be scary. You must take a look at your...
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...The external environment in which businesses operate can have a significant effect on their success. To what extent do you think that the external environment in the UK is favourable for businesses at the moment? Justify your answer with reference to external factors and/or businesses that you know. (40 Marks). Now at the start of 2013 the UK is at the recovering stage in the business cycle after, a double dip recession which saw a mass slow down of economic activity. The effects of the recession can still be felt, for example consumers with less disposable income, therefore un-willing to spend and due to quantitive easing measures taking place,interest rates are still at a record low of 0.5%. An external environment is something that can influence your business from the outside but is out off your control. The economic system can be seen as the largest external environment in this situation. The extent that the external environment in the UK is favourable depends on many different factors. One way in which the external environment is favourable to UK retailers at the moment (2013) depends on the product and what kind of business it is. For example people are currently suffering economically therefore have less disposable income, so business selling cheaper goods for their market wont be affected as people will be willing to buy from them to spend the lest amount possible, this recession and recovery stage may even be great for them as more and more people will have to...
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...Background EU Crisis • 1957 - Treaty of Rome (Germany, Belgium, Luxemnourg, Italy, France and Netherlands) • 1979 European Monetary Union (EMU) - Exchange Rate Mechanism (ERM) • still own currencies • economic cycles were not in sync • 1992 The Maastricht Treaty - introducing the Maastricht Criteria: • Independence from their governments • Convergence in inflation rate >> convergence in long-term interest rates (average had to be near of the group‘s best performer) • Fiscal deficits could not exceed 3% of GDP (growth & stability pact) • Government debt < 60% GDP • 1999 Euro: rate of 1.16675 dollars per Euro - 11 countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. • became major international currency • 2001 • 2007 Slovenia, Cyprus • 2008 Malta • 2009 Slovakia • 2011 Estonia < • 10 Eu members do not use the Euro: Bulgaria , Czech Republic, Denmark, Latvia, Lithuania, Hungary, Poland, Russia, Sweden, UK • at first: convergence of long-term interest rates because of common monetary policies, common currency, perceived fiscal straightjacket (growth and stability pact) >> market pushed long term rates down >> created bubbles (exp. real estate) 2008: after Lehman collapse: gap between Greece and Germany started to increase (100 points) >> divergence seemd natural 2009: • risky assets all over the world >> spread widened (300 points) >> went back to 100 points same year • ECB...
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...Sustained growth in India since the 90s According to the neo-classical theory, growth is only sustainable if it is driven by technological progress or productivity growth. Innovation and incentives to innovate are therefore essential. In order to increase incentives, some institutions and/or policies should be put in place. Firstly, well established property rights create incentives for innovation through increased returns mainly because investors can keep a bigger portion of the profit they make. Secondly, an effective education system increases efficiency of technologies and investment and reduces cost of skilled labour which in turn increases return of innovation. Thirdly, macroeconomic stability and consequent low interest rates encourage entrepreneurial behaviour. Another important factor is the access to credit and a sound financial market, which makes it easier to borrow money for projects. Lastly, higher competition among incumbent firms and higher entry threat will encourage innovations by incumbent firms close to the technological frontier. In what follows, we try to provide an answer to why the "take-off growth" in the 80s is not considered as sustainable and what the factors of the sustained growth in the 90s m Although the liberalization reforms in the 80s contributed to a long-run productivity growth, it is argued that the accelerating growth of the 80s was not sustainable, mainly because the government boosted demand through domestic expenditures (Panagariya,...
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...Master’s thesis M.Sc. in EU Business & Law An analysis of the European low fare airline industry - with focus on Ryanair Student: Thomas C. Sørensen Student number: 256487 Academic advisor: Philipp Schröder Aarhus School of Business September 13, 2005 1 Table of contents 1. Introduction 1.1. Preface 6 1.2. Research problem 6 1.3. Problem formulation 7 1.4. Delimitation 7 2. Science and methodology approach 2.1. Approaches to science 2.1.1. Ontology 2.1.1.1. Objectivism 2.1.1.2. Constructivism 2.1.2. Epismotology 2.1.2.1. Positivism 2.1.2.2. Hermeneutics 9 9 9 9 10 10 10 2.2. Methodology 2.2.1. Types of research 2.2.2. Types of data 2.2.2.1. Quantitative data 2.2.2.2. Qualitative data 2.2.2.3. Primary and secondary data 11 12 13 13 13 14 2.5 Reliability and validity 15 3. Theoretical framework 3.1. The structure of this thesis 16 3.2. Theory on strategy and competitive advantage 3.2.1. The Positioning School 3.1.1.1. Theory on Porter´s Five Forces model 3.2.1.2. Theory of Generic Strategies 3.2.2. The Resource-based School 3.2.2.1. Theory on SWOT analysis 18 24 20 23 25 27 4. The low fare airline business model 4.1. Introduction 28 4.2. Differences between the LFA model and the FSA model 4.2.1. The service factor 29 29 2 4.2.2. Turnaround times 4.2.3. Homogenous fleet 4.2.4. Point-to-point travel vs hub-and-spoke travel 4.2.5. Higher seat density 4.2...
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