Friday, August 5, 2011

How can a country (Japan) have Trade Surplus and Deflation at the same time?

Japan has been in liquidity trap since the Plaza accord in 1985,but only once in deflation spiral. And it was because of the subprime in the US which was contagious to the world's economy.The government has solved the problem using the green points to help selling the products.It had reduced the policy rate from nearly zero to zero, but it was not because of the inflation.It was to help solving the strong Yen.

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