Brief overview of "Pre-War National Accounts":
How the Japanese economy fared in 1930s is quite relevant for us. At the beginning of 1930s, the Japanese economy suffered a severe deflation. The economy shrunk by 20% on nominal terms between 1929 to 1931. The Japanese government tried to cope with the problem through a combination of a sharp yen depreciation and a fiscal expansion with the Bank of Japan directly underwriting government bonds. The economy responded well to the stimulus and the deflation was eliminated by 1933. The policy, known as Takahashi Finance, taken from the Finance Minister Korekiyo Takahashi at the time, is said to be a model for Abenomics. Readers should be aware what happened subsequently to the economy though. The attempt to rein in the fiscal spending failed, Japan walked into a war with a surging and eventually uncontrolled inflation.