Takatoshi Ito, 11 September 2013

Abenomics comprises three ‘arrows’. The monetary and fiscal arrows have been launched; the pro-growth arrow has not. This column suggests that arguments over the consumption tax burn up precious political capital that would be better spent on growth reforms. A consumption-tax hike won’t stall the expansion, but debates over it threaten to stop reform momentum. The time to release the third arrow is now.

Takeshi Kimura, Jouchi Nakajima, 31 August 2013

Unconventional monetary policy is now routine, but its impact is still poorly understood. A key difficult is empirically separating policy changes – ‘shocks’ – from other factors driving the economy. This column proposes a new estimation framework for identifying monetary-policy shocks in both conventional and unconventional policy regimes and applies it to Japan. Japan’s increase in bank reserves lowered long-term interest rates in the unconventional policy regime and may have had a positive impact on inflation and the output gap.

Ayako Saiki, 15 June 2013

Abenomics is all the rage. Japan’s GDP grew at an annual rate of 3.5% in the first quarter, the stock market went up by almost 30% since December, and despite some uncertainties, sentiments, consumption, and exports are all picking up. However inflation is at -0.9% and survey-based inflation expectation has remained flat. Is inflation going to happen at all? This column argues the answer crucially hinges upon the implementation of structural reforms, especially in the labour market.

Yasuyuki Todo, 11 May 2013

Japan looks set to participate in the Trans-Pacific Partnership (TPP) negotiations. Reflecting the current debate in Japan, this column assesses what effect the Partnership will have on Japan’s growth. Evidence suggests that the economic effects may be far bigger than the current consensus suggests.

Richard Baldwin, Daniel Gros, 17 April 2013

The Bank of Japan has now joined the club of central banks practising a new, post-Crisis form of inflation targeting. This column discusses the new goals, new tools and new challenges of ‘augmented inflation targeting’. Despite economists’ worries and the many unknowns ahead, there really is no alternative in a post-Crisis world. Augmented inflation targeting is here to stay.

Patrick Messerlin, 16 April 2013

Mega-regional trade arrangements are being negotiated in Asia. This column asks how Europe should respond and assesses which Asian trade deals would provide the biggest boost and the best insurance against discriminatory effects. The evidence tentatively suggests Europe’s best bets are Japan and Taiwan.

Michael Stolpe, 22 March 2013

The crisis has shot holes in government budgets devoted to pro-growth public goods. This column argues that health-related public goods support long-term economic growth. Governments may be more inclined to focus on spending related directly to jobs, such as education and welfare-to-work programmes, but health should not be forgotten

Willem Thorbecke, 26 February 2013

Policymakers everywhere are concerned about currency wars. Are quantitative easing and managed exchange rates bad for the global economy? This column looks at the hard empirical evidence, arguing that, in fact, Japan is behaving rather responsibly and that other strong economies have themselves benefited from undervalued currencies. That said, it is true that politicians’ short time horizons often lead to stealthy policy and large swings in exchange rates. Economists should therefore aim to promote longer-run cosmopolitan interests rather than shorter-run nationalistic agendas where possible.

Keiichiro Kobayashi, 10 February 2013

Japan is under new leadership, bringing fresh attempts to tackle deflation. This column argues that the lessons we can learn are Going forward, a change of party politics with every change of government will likely become a recurring event in Japan. In order to restore people’s confidence in the fiscal management and social security system in the light of that prospect, institutional systems should be designed in a way to allow flexibility, premised on the fact that the government cannot make commitments into the remote future. Political leaders – whether they belong to the ruling or opposition parties – need to come up with new ideas toward achieving that end.

Daiji Kawaguchi, 02 February 2013

Japan switched to five-day weeks for its primary and junior high schools and saw an increase in educational inequality. This column discusses new evidence suggesting a loose tie between number of days at school and inequality. Importantly, this tie reflects the fact that homes with university-educated parents tend to offset the official reduction in hours with additional tuition.

Petra Gerlach-Kristen, Robert McCauley, Kazuo Ueda, 07 November 2012

Do incidental large-scale bond purchases have a global portfolio balance effect? This column argues that one country’s bond purchases can ease monetary conditions abroad. Whether this effect is welcome depends on the phase of the business cycle, but the authors emphasise that it is of paramount importance for resolving the current crisis that Eurozone policymakers closely consider the effects of large-scale bond buying.

Simon Johnson, Peter Boone, 21 September 2012

Industrialised countries today face serious risks – for their financial sectors, for their public finances, and for their growth prospects. This column explains how, through our financial systems, we have created enormous, complex financial structures that can inflict tragic consequences with failure and yet are inherently difficult to regulate and control. It explains how this has happened and why there are more and worse crises to come.

Yoko Konishi, Yukiko Saito, 10 September 2012

Since 2001 Japan has had in place an ‘Industrial Cluster Policy’ aimed at making the most out of situating companies close together. This column looks at the benefits for firms in the same industry as well as for firms in different industries.

Yasuyuki Todo, 15 July 2012

Offshoring continues to be a controversial issue in many developed countries. This column provides evidence from Japan and argues that policymakers should not worry too much about the loss of jobs; while unskilled jobs are offshored, they are replaced with skilled jobs, leading to a more productive use of the domestic labour force.

Luc Laeven, Fabian Valencia, 09 July 2012

Do advanced economies have an edge in resolving financial crises? This column shows that the record thus far supports the opposite view, with the average crisis lasting about twice as long as in developing and emerging market economies. It argues that macroeconomic stabilisation policies in advanced countries often delay the necessary financial restructuring.

Pradumna Rana, 25 June 2012

China, Japan, and South Korea are currently negotiating a free trade agreement (FTA) lending support to the possibility of an agreement for the South-East Asian region as a whole. This column calls for more of the same – and quickly.

Yasuyuki Todo, 07 June 2012

How do firms go international? This column reviews evidence from industrialised and emerging economies, including Japan and China, with some surprising findings.

Richard Baldwin, Toshihiro Okubo, 24 May 2012

New-paradigm globalisation – driven by lower coordination costs rather than trade costs – is changing the nature of international commerce, the political economy of trade liberalisation, the nature of trade agreements and much more. This column, using data on Japanese multinationls, presents evidence that the nature of FDI is also changing away from the traditional classification of ‘horizontal’ or ‘vertical’.

Florian Mölders, Ulrich Volz, 23 March 2012

The Trans-Pacific Partnership is back on course having received interest from the Canada, Japan, and Mexico in recent months. This column argues that as changes to the TPP start to seem more likely, there may be trade effects in anticipation. In the face of potential trade diversion, the column urges European trade policymakers to strengthen the EU’s trading ties with the Asia-Pacific region, preferably by reviving global trade talks.

Noboru Kawahama, 22 March 2012

Competition may drive down prices but it also drives down profits – and some would argue innovation as well. How should policymakers balance the short-term need for competition with the the long-term need for innovation? This column explores the idea of ‘innovation and competition policy’ rather than just ‘competition poliicy’.

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