In May 2002, Bank of Japan Governor Masaru Hayami proclaimed that Japan was entering its third recovery since the bursting of the bubble economy.1 Although the 1990s were marked by economic stagnation, there were two periods of brief but remarkable economic growth, namely 1996, when close to 4% real GDP growth was recorded, and 2000, when over 2% growth was achieved. In both cases, very few, if any, economists had forecast such sudden recoveries. Similarly, many economists were surprised by the sharp upturn recorded in most economic indicators in early 2002.2
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