The deflation in Japan first occurred in mid-and late-1990s and lasted until 2006.It stoke again in the year of 2009 and has become a chronic illness of Japanese economy.The occurrence of deflation requires a very complicated mechanism.A retroaction between the deflation and the decrease of the aggregate demand helps to develop a self-enforcement mechanism，which deteriorates economic recession and deflation.To deal with this problem，the Japanese government has adopted various policies，including quantitative easing and speedy handling of bad credits，etc.In the past two years，a series of economic stimulus policies have been carried out to cope with the impact of international financial crisis.