Meaning: This quote by Toshihiko Fukui, a former governor of the Bank of Japan, addresses the impact of asset price fluctuations and structural adjustments on sustained economic growth, particularly in the context of Japan's experience since the 1980s. To provide a comprehensive understanding of this quote, it is important to delve into the historical and economic context of Japan during this period, as well as the significance of asset price fluctuations and structural adjustments in shaping economic growth.

In the second half of the 1980s, Japan experienced a period of rapid economic expansion, characterized by soaring asset prices, particularly in the real estate and stock markets. This period, often referred to as the "bubble economy," was marked by speculative fervor and excessive asset valuations. The surge in asset prices led to a wealth effect, where consumers felt more affluent and increased their spending, further propelling economic growth. However, this economic exuberance was unsustainable, and it eventually culminated in a severe asset price collapse in the early 1990s.

The bursting of the asset price bubble had profound and long-lasting effects on Japan's economy. The subsequent structural adjustments, including deleveraging, corporate restructuring, and financial sector reforms, were necessary to address the aftermath of the bubble's collapse. This period of adjustment was characterized by economic stagnation, deflation, and the prolonged struggle of Japanese banks and corporations to address non-performing loans and excess capacity.

Fukui's quote underscores the critical link between asset price fluctuations, structural adjustments, and sustained economic growth. Asset price fluctuations can have far-reaching implications for an economy, as they impact consumer and business confidence, investment decisions, and the overall stability of the financial system. The subsequent structural adjustments, while necessary for long-term economic health, often entail short-term pain as the economy transitions and recalibrates.

Japan's experience serves as a valuable case study for understanding the complexities of managing asset price fluctuations and structural adjustments. The prolonged nature of Japan's economic malaise following the burst of the asset bubble underscores the challenges of navigating such a transition. It also highlights the importance of timely and effective policy responses to mitigate the adverse effects of asset price collapses and facilitate a smoother adjustment process.

In contemporary economic discourse, the lessons from Japan's experience remain relevant, particularly in the context of financial market dynamics and the potential vulnerabilities associated with asset price bubbles. Policymakers and economists continue to study Japan's experience to draw insights into the management of asset price fluctuations and the implications for sustained economic growth.

In conclusion, Toshihiko Fukui's quote encapsulates the significance of understanding the interplay between asset price fluctuations, structural adjustments, and sustained economic growth, as exemplified by Japan's experience since the second half of the 1980s. The complexities and challenges inherent in managing these dynamics underscore the importance of proactive and prudent economic policy to navigate through periods of asset price volatility and facilitate a more resilient and sustainable economic trajectory.