Since the 1990s, Japan has been plunged into a deflationary spiral which has had a strong impact on the country as a whole. This deflation that crippled the booming economy of the 1970s and 1980s was the result of many factors, the most important of which was the bursting of the asset bubble. This happened in the early 1990s due to uncontrolled credit supply and a rapid rise in asset prices. According to some economists, the recovery from the economic crash that followed is still not complete. “In Japan, prices have generally not increased since the late 1990s,” which is a very bad thing (Gruber). There have been many cases where the Bank of Japan tried to correct this failure, but without success. Three of these attempts at correction have involved lowering interest rates, quantitative easing, and expansionary monetary policy. However, more recently there has been another stimulus attempt using similar methods, in addition to an increase in the consumption tax rate. The Japanese government's first attempt to stop the deflationary spiral was to lower interest rates. In 2000, the Bank of Japan launched ZIRP, or zero interest rate policy. It was canceled later that year, but was reinstated a year later in 2001. This policy brought interest rates to near 0% in an effort to revive the economy. This revival was supposed to occur through the creation of increased demand for goods and services, as well as increased business investment (Jacobs). However, as we discussed in class, lowering the interest rate to stimulate investment, consumption, and overall spending only works in normal times (Fairchild). This initiative alone proved insufficient to revive the economy. So, plus, Japan started with... middle of paper... nothing. "Laisse Faire. Np, April 6, 2013. Web. April 29, 2014. Gruber, James. "Japan 20-"The year the deflationary spiral is about to end." Asia Confidential. Np, April 27, 2014. Web. April 29, 2014. Hayashi, Yuka. "Japan's History of Caution on the Fed's Monetary Policy." The Wall Street Journal. Dow Jones & Company, November 22, 2010. Web. April 29, 2014. Jacobs, Michael P. “The Good and the Bad of ZIRP - US News.” » US News, March 22, 2013. Web, April 28, 2014. "Japan's CPI rises less than expected." The Wall Street Journal, April 25, 2014. Web April 29, 2014. Schlesinger, Jacob. "Japan's tepid victory over deflation - Real Time Economics - WSJ." Wall Street Journal. Np, April 24, 2014. Web. May 1, 2014. Tabuchi, Hiroko. “The yen's pinch undermines Japan's efforts against years of deflation. » The New York Times, March 10, 2014. April 29. 2014.