The Causes of the Japanese Deflationary Crisis in the Light of the Austrian School of Economics

The aim of this study is an attempt to indicate the causes of deflationary crises through the presentation of the phenomenon of deflation and its causes in the light of the Austrian school of economics and to show that the most remarkable case of deflation in recent history, which took place in Japan confirms the Austrian assertions in respect of factors causing severe deflation. For this purpose, basing on relevant literature, the author presents the Austrian view on the concept of deflation and the main aspects of the Austrian Business Cycle Theory. Subsequently, the author analyzes the monetary policy of Japan in the period preceding deflation, pointing out the facts from the contemporary Japanese economy seem to confirm the assertions of the Austrian school of economics.