Secular stagnation, the threat of deflation, public debt overhang . . . A number of the world's developed economies are facing these challenges nine years after the global financial crisis broke out in European money markets in summer 2007. They are well known, though, to many Japanese, whose economy has faced them over roughly a quarter-century now, a period often referred to as "Japan's lost decades."
In the past Japan's economic malaise was considered to be unique. Some pundits attributed it to Japan's aging and declining population and others to its egalitarian society, which "hammers down the stake that sticks out," thereby penalizing innovation. Now that the economic malaise appears not so unique to Japan, however, it is worth revisiting what went wrong during the lost decades and examining what Japan is now trying to do under the name of Abenomics in order to end the malaise.