Abstract

In response to the prolonged economic downturn, the Japanese government adopted an expansionary fiscal policy stance for most of the 1990s. With a brief interruption in 1997, when growth temporarily improved, the general government’s fiscal position (excluding social security) steadily deteriorated from balance in FY1990 to an estimated deficit of 8 percent of GDP in FY1998. In particular, the government tried to revive activity through a series of stimulus packages between 1992 and 1995, and again through substantive packages in 1998 and 1999 (Table 6.1). These packages have involved significant “headline” figures (often above 2 percent of GDP), capped by a ¥24 trillion package (5 percent of GDP) in November 1998.