A Welfare Cost of the Lost Decade in Japan

Abstract

This paper measures the welfare cost of the Japanese economy in a ‘lost decade’ from 1990 to 2002, by using panels of different consumer groups. The paper finds that the costs for consumers in the lower and middle income quintiles and in urban districts are much higher, while there exists a benefit for consumers in rural districts. We suggest that such cost disparities express the business slump related to districts and income quintile group with high costs. Also, there exist consumers feeling this stagnation to be low-cost and the seriousness of stagnation is not recognised unanimously.