Indeed, the output gap has deteriorated following a series of domestic and external shocks, such as the collapse of the asset bubble in the early 1990s, the Japanese financial crisis and East Asian currency crises in the second half of the 1990s, the collapse of the IT bubble in the United States during the early 2000s, the global financial crisis of 2008, the European sovereign debt problems since 2010, the Great East Japan Earthquake and Thailand floods of 2011, and the spreading effects of recent developments in the relations between Japan and China.
Except for a short period, this series of shocks has prevented the negative output gap from narrowing quickly to positive territory. 18  See Shirai, Sayuri, “Have Demographic Changes Affected Japan’s Macroeconomic Performance?