As is often argued, the economy has to endure a period of lower growth after a malign bubble bursts. Chart 4 shows the rolling ten-year average of the per capita GDP growth rate of advanced countries. After the collapse of the bubble, the Japanese per capita rate plunged from above 3 to around 1.
It is remarkable to note that the per capita GDP growth of the United States and major European countries also fell almost uniformly to around 1 after the collapse of the their bubbles (except for Italy, where the rate has fallen even further to become negative). Debt overhang and resulting deleveraging are often cited as the major culprits of this substantially lower growth.