Japan 2.0: Lasting transformation or fleeting trend?

The Nikkei 225 index hit an all-time high of 38195 points in December 1989, a fitting finale to a decade of spectacular boom in Japan. But as 1990 began, Japan's asset bubble burst and the stock market went into a long slump. For the next three decades, the country experienced low growth, low inflation, low interest rates, and a rapidly ageing society—a phenomenon so novel that it became known as Japanification. This staggering economic decline did not respond to fiscal stimulus or monetary easing, and barely budged when the Bank of Japan experimented with yield curve control. Metaphorically speaking, it…