In the 1970s, Japan had one of the most admired economies in the world. Economists believed that it would achieve the highest standard of living and continue to develop the best technologies. Around this time, Japan increased its gross national product and eventually reached number one in the late 1980s. However, everything changed in the early 1990s and Japan entered what has been described as its first lost decade (Kuepper, nd). and historians have studied the causes of Japan's stagnation over the past twenty years, but opinions on the matter vary greatly. Most agree that the huge asset "bubble" is the cause of the initial stagnation, but they disagree on why this situation persists. Some believe that the lack of dynamism in the domestic sector and the aging of the population are to blame because they slow down domestic spending (Samuelson, 2010). Other economists, such as Paul Krugman, believe that excessive saving by consumers and businesses is the root cause (Kuepper, n.d.). Very low interest rates stimulated stock market and real estate speculation in the 1980s. All the speculation during the expansion cycle caused the start of the crisis. The valuation of state-owned properties and companies tripled during this period, and land in Tokyo became extremely expensive (Kuepper, n.d.). The asset price bubble burst in 1992 and at first it was only a decline following the stock market crash (Posen, 1998). However, the economy has not recovered since. Shortly after the 1992 crash, stocks had fallen 57 percent from 1989 levels. The banks were in trouble; some even became insolvent because they had lent against inflated land values. The economy continued to grow at a...... middle of paper...... micro Stagnation? Aei-Ideas.org. Retrieved February 2, 2014 from: http://www.aei-ideas.org/2013/11/baby-bust-will-china-avoid-japans-nomic-stagnation/Posen, SA (1998). Some general questions and answers about Japanese economic stagnation. Peterson Institute for International Economics. Retrieved February 9, 2014 from: http://www.iie.com/publications/testimony/testimony.cfm?ResearchID=317Samuelson, RJ (2010). How to avoid Japan's mistakes. Washington Post. Retrieved January 5, 2014 from http://www.washingtonpost.com/wp-dyn/content/article/2010/11/14/AR2010111403886.html Whitley, S. (2013). How Abenomics benefits Japanese companies. Financial Times.com. Retrieved February 9, 2014 from the Financial TimesXu, B. (2013). Abenomics and the Japanese economy. Council on Foreign Relations.org. Accessed February 2, 2014 at: http://www.cfr.org/japan/abenomics-japanese-economy/p30383