Macroeconomics Case study of Japan

Question: Discuss about the Macroeconomics for Case study of Japan. Answer: Introduction to macroeconomics, GDP and economic growth Sources Data.worldbank.org. (2016). GDP growth (annual %) | Data. Retrieved 20 November 2016, from https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=JP Sato, T. (2016). Global Financial Crisis: Japans Experience and Policy Response. frbsf.org. Retrieved 20 November 2016, from https://www.frbsf.org/economic-research/files/Panel_Sato.pdf Summary According to the article mentioned above, Macroeconomics is a branch of economics where national, global and regional economics are discussed. Economic variables such as gross domestic product, unemployment, inflation rate, interest rate, fiscal and monetary policy, investment. Saving and spending of public, private sectors and the individual are discussed in the macroeconomic studies. Japan is a developed country and third largest country in the world in terms of nominal GDP. As per World Bank, during 2016, nominal GDP of Japan is $4.41 trillion. After 2012, GDP of Japan started to fall steadily. However, GDP has increased in 2016 from 2015, when GDP was $4.123 trillion (data.worldbank.org, 2016). During 2008-09, GDP growth rate was negative. Japan economy is still at recovery stage after global recession in 2008-09. Figure 1: GDP growth rate of Japan (Source: data.worldbank.org, 2016) Analysis Japan economy experienced negative growth rate during 2008-09 due to the effect of global financial crisis. As stated by Soble (2015), collapse of housing and securitisation market in US hit Japan market during 2008-09 as Japanese financial firms were involved in the domestic property market. Harding Wells (2016) argued that the root of Japan banking crisis prevailed within country and hence, global financial crisis had spilled over quickly in the Japanese economy. However, short term stabilisation policy taken by government helped to overcome this situation rapidly. However, due to the after effect of global recession in 2008-09, Japan economy again entered into the recessionary phase due to decline in investment, declining confidence of investors (Sato, 2016). Moreover, economic slowdown in China was another reason. Japanese export of industrial equipment, construction machinery and capital goods reduced due to lower demand from China. However, Japan economy has started to recover during the first quarter of 2016 due to fiscal stimulation policy taken by government. Boosting aggregate demand in short term has been effective in short run. Topic 3: Wages and unemployment Sources Stat.go.jp. (2016) Statistics Bureau Home Page/Labour Force Survey/Monthly Results -September 2016-. Retrieved 20 November 2016, from https://www.stat.go.jp/english/data/roudou/results/month/ mainichi.jp (2016). Japan's average minimum wage set at 823 yen per hour, biggest rise since 2002 - The Mainichi. The Mainichi. Retrieved 20 November 2016, from https://mainichi.jp/english/articles/20160824/p2a/00m/0na/021000c Summary According to the article, Japanese government has raised the minimum wage rate during 2016. Government has announced that the average minimum hourly wage rate will be increased to 823 yen from 800 yen. Minimum wage in Japan varies across the region (mainichi.jp, 2016). Government has taken this policy to boost aggregate demand in the economy. Wage bargaining power of the workers in the informal sector is low. Job market in the informal sector is rigid and therefore, workers are vulnerable in the private and informal sector. Minimum wage hike may facilitate workers of all the sectors. Government has asked the business leaders to raise wages of employees to beat the effect of deflation in the economy. Figure 2: Wages in Japan (Source: Stat.go.jp, 2016) Unemployment rate in Japan economy is falling continuously from 2013 to 2016. During 2013 September, the unemployment rate was 3.95. The rate has decreased to 3% during September 2016. Unemployment rate has hit the lowest rate since 1995. Figure 3: Unemployment rate in Japan (Source: stat.go.jp, 2016) Analysis The minimum wage rise policy has been taken by the Japanese government to boost the economy from the deflationary effect. However, Nohara Miller (2016) argued that this policy discourages the business operates to hire people at a higher wage. Increase in minimum wage raises the cost of operation. Hence, there is a possibility for business firm to shift toward capital augmenting technology. Increase in minimum wage will benefit the part time worker and the low paid workers in the informal sector. On the other hand structural reform policy has kept the unemployment rate in the Japan economy low. This policy has increases the scope of job availability in the economy significantly. References Data.worldbank.org. (2016). GDP growth (annual %) | Data. Retrieved 20 November 2016, from https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=JP Harding, :. Wells, P. (2016). Japan GDP growth rate jumps to 1.7%. Ft.com. Retrieved 20 November 2016, from https://www.ft.com/content/866509c8-1c8e-11e6-a7bc-ee846770ec15 mainichi.jp (2016). Japan's average minimum wage set at 823 yen per hour, biggest rise since 2002 - The Mainichi. The Mainichi. Retrieved 20 November 2016, from https://mainichi.jp/english/articles/20160824/p2a/00m/0na/021000c Nohara, Y. Miller, B. (2016). IMF sees Japanese talent locked in low-paying jobs | The Japan Times. The Japan Times. Retrieved 20 November 2016, from https://www.japantimes.co.jp/news/2016/09/29/business/imf-sees-japanese-talent-locked-low-paying-jobs/#.WDHMJdV97IV Sato, T. (2016). Global Financial Crisis: Japans Experience and Policy Response. frbsf.org. Retrieved 20 November 2016, from https://www.frbsf.org/economic-research/files/Panel_Sato.pdf Soble, J. (2015). Japan Economy Contracts 0.8%, Returning to Recession. Nytimes.com. Retrieved 20 November 2016, from https://www.nytimes.com/2015/11/16/business/international/japan-economy-contracts-0-8-returning-to-recession.html?_r=0 Stat.go.jp. (2016) Statistics Bureau Home Page/Labour Force Survey/Monthly Results -September 2016-. Retrieved 20 November 2016, from https://www.stat.go.jp/english/data/roudou/results/month/