BIS central bankers’ speeches  1  I. Changes in Japan’s economy  Record profits and firms’ positive investment stance I would like to start by touching on the improvement in the corporate sector. As I mentioned, Japanese firms have been making record profits. In fact, their profits have considerably exceeded those around 1990 at the peak of the bubble economy (Chart 2).
There is a 'deflation trap', or what we learned about in undergraduate economics as a 'liquidity trap'. 4  Some have argued that this is the right diagnosis of Japan's situation. The question is: how likely is it that other countries will get into this sort of problem?