Great Depression Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.Anti-spam check. Do not fill this in! ===Japan=== The Great Depression did not strongly affect Japan. The Japanese economy shrank by 8% during 1929β31. Japan's Finance Minister [[Takahashi Korekiyo]] was the first to implement what have come to be identified as [[Keynesian economics|Keynesian]] economic policies: first, by large fiscal stimulus involving [[deficit spending]]; and second, by devaluing [[Yen|the currency]]. Takahashi used the Bank of Japan to sterilize the deficit spending and minimize resulting inflationary pressures. Econometric studies have identified the fiscal stimulus as especially effective.<ref>Myung Soo Cha, "Did Takahashi Korekiyo Rescue Japan from the Great Depression?", ''The Journal of Economic History'' 63, No. 1 (March 2003): 127β144.</ref> The devaluation of the currency had an immediate effect. Japanese textiles began to displace British textiles in export markets. The deficit spending proved to be most profound and went into the purchase of munitions for the armed forces. By 1933, Japan was already out of the depression. By 1934, Takahashi realized that the economy was in danger of overheating, and to avoid inflation, moved to reduce the deficit spending that went towards armaments and munitions. This resulted in a strong and swift negative reaction from nationalists, especially those in the army, culminating in his assassination in the course of the [[February 26 Incident]]. This had a [[chilling effect (term)|chilling effect]] on all civilian bureaucrats in the Japanese government. From 1934, the military's dominance of the government continued to grow. Instead of reducing deficit spending, the government introduced price controls and rationing schemes that reduced, but did not eliminate inflation, which remained a problem until the end of World War II. The deficit spending had a transformative effect on Japan. Japan's industrial production doubled during the 1930s. Further, in 1929 the list of the largest firms in Japan was dominated by light industries, especially textile companies (many of Japan's automakers, such as [[Toyota]], have their roots in the textile industry). By 1940 [[light industry]] had been displaced by heavy industry as the largest firms inside the Japanese economy.<ref>(For more on the Japanese economy in the 1930s see "MITI and the Japanese Miracle" by [[Chalmers Johnson]].)</ref> Summary: Please note that all contributions to Christianpedia may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here. You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see Christianpedia:Copyrights for details). Do not submit copyrighted work without permission! Cancel Editing help (opens in new window) Discuss this page