Nikkei closes high as Japanese minister reuses 1930s stimulus model

<p>The Nikkei 225 has closed higher after the Japanese finance minister announced plans to revive the economy last seen in the 1930s.</p>

The Nikkei 225 in Japan has closed on a positive note this morning (February 4th), following news the Japanese finance minister is reusing a stimulus model last implemented in the 1930s.

Taro Aso said the government is imitating steps taken 80 years ago that include the underwriting of government bonds to fund deficit spending, Bloomberg reports.

Mr Aso is emulating actions taken by his predecessor Korekiyo Takahashi, whose policies of monetary expansion and centrally-financed spending aimed to give the economy a chance to beat deflation, analysts have speculated.

Mr Takahashi's scheme saw the Bank of Japan (BOJ) underwrite debts for 14 years until the end of the second world war, with the ratio of bonds bought by the bank peaking in 1933 at 89.6 per cent.

The finance minister told television network NHK: "There is no one in the government, the bureaucracy or the BOJ who has experience in anti-deflation policy. We can only learn from history."

At close of play this morning, the Nikkei 225 rallied by 0.6 per cent to 11260.3 points.

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