Macroeconomics During The Mid 1980s
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Foreign imports sometimes might have negative results for local industries, as a result of competition.
Throughout the ‘90s the real estate fell by 70%. Following by the bursting of the bubble unemployment increased.
Why was this recession so severe?
1) Zombie Landing: Banks lost money on real estate loans they had issued, but still had to repay deposit. The government delayed bank’s recognition of losses, letting them to continue lending money to the zombie firms.
2) Balance Sheet Recession: Many firms and households borrowed a lot of money, but firms spent more of their capital paying off the debt rather than growing their business. Government’s efforts to cut interest rated and stimulate the economy were useless, as any extra
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