The currencies and financial markets of South-East Asian countries, which have been the high-growth area, have been in turmoil since summer of 1997, and an adverse impact on the Japanese economy has been anticipated. In addition, recent successive failures of large Japanese financial institutions have once again aroused concern about the stability of Japan’s financial system in Japan and abroad.
Thus, it is not easy to judge where the Japanese economy is headed and to draw up a prescription for each problem. In such a situation, it is important that the circumstances be analyzed carefully so as to perceive the underlying mechanism.