How a collapse of banking system cause a fall in real output

Reference no: EM131223390

Many economists have argued that Japan's economic problems during the 1990s were caused largely by bank failures and the refusal of the Japanese government to clean up the banking system.

Explain how a collapse of the banking system could cause a fall in real output. Can monetary policymakers do anything to revive the economy under such circumstances?

Reference no: EM131223390

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