The Japanese Economy and Economic Policy in Light of the East Asian Financial Crisis

Ramkishen Rajan

Macroeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: The depth and breadth of the East Asian financial crisis has added a sense of acute urgency for some concrete and credible measures by policy-makers to revitalise the Japanese economy. While steps to be taken for the long-run competitiveness and economic revitalisation of the Japanese economy are clear (with the only doubt being about whether and how effectively they will be implemented), those needed to boost aggregate demand in the shortrun are far less obvious. Given the near-zero nominal interest rates in Japan, most observers argue that an expansionary monetary policy would be ineffective. However, as with Krugman (1998a,b), we argue that once a distinction is made between real and nominal interest rates, it is logically possible for monetary policy to be effective in raising demand if it is able to create inflationary expectations. This could probably be effected through explicit announcements by the Bank of Japan of the intention to target a certain inflation rate in the future.

Keywords: Japanese economy; economic policy; East Asia; financial crisis (search for similar items in EconPapers)
JEL-codes: G01 (search for similar items in EconPapers)
Date: 1998-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.eaber.org/node/22382 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 301 [REDIRECT LOOP] Moved Permanently (http://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382 [301 Moved Permanently]--> https://www.eaber.org/node/22382)

Related works:
Working Paper: The Japanese Economy and Economic Policy in Light of the East Asian Financial Crisis (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eab:macroe:22382

Access Statistics for this paper

More papers in Macroeconomics Working Papers from East Asian Bureau of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Shiro Armstrong ().