Economic Stagnation in Japan
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Economic Stagnation in Japan

Exploring the Causes and Remedies of Japanization

Edited by Dongchul Cho, Takatoshi Ito and Andrew Mason

Japan’s dramatic transformation from economic success to economic stagnation offers important policy lessons to advanced countries everywhere that are struggling with stagnation. The term ‘Japanization’ is often used by economists to describe long-term stagnation and deflation. Symptoms include high unemployment, weak economic activity, interest rates near zero, quantitative easing, and population aging. In the global context, what can governments do to mitigate the downward trends experienced by Japan? This judiciously timed book investigates in depth the causes of Japan’s ‘lost decades’ versus the real recovery achieved by the United States, and the lessons that can be learned.
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Chapter 11: Aging and housing prices: the cases of Korea and Japan

Inho Song


Inho Song examines aging as a structural factor affecting housing prices. His long-term price model, using a model of demographic structure by age group, simulates the trend of housing prices, assuming that Korea’s housing market may experience aging similar to Japan’s over the next 20 years. Results show a downturn from 2019 (annualized growth rates of –1 to –2 percent) in real housing prices, but a rise in nominal ones (by an annual average 0.4 percent), even with effects of population aging. Results are consistent with the lifecycle hypothesis and overlapping generation models, in that aging has a direct impact on asset prices. Korea’s housing market has not yet experienced the aging effects that Japan’s has. Inflation in housing prices will be the factor deciding whether population aging effects on the housing market in Korea will be similar to those in Japan.

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