Abstract: Looking back at Japan's economic performance over the past thirty years, three puzzling issues arise. First, Japan's economy has been stagnating for a long time, far beyond the usual business cycle and the timeframe of a real estate crisis. Second, after the bursting of the real estate bubble, Japan's various indicators, aside from housing prices, did not immediately show a significant decline. The real downturn did not occur until after 1997, making Japan's real estate cycle far longer than that of most countries' real estate crises. Third, despite the prolonged economic slump, Japan's stock market returned to an upward trajectory starting in 2003. Our explanation for these issues is threefold. First, the fundamental reason for Japan's long-term economic sluggishness is its continuous struggle against the "gravitational pull." Second, the reason for the longer real estate cycle is the delayed but unavoidable effects of gravity. Third, despite hesitation in policy choices, Japan eventually adopted the right measures. The stock market, a barometer of the economy, grew as a response to correct policies.
