Monetary Policy and Structural Decline: Lessons from Japan for the European Crisis
| Autor: | Gunther Schnabl |
|---|---|
| Rok vydání: | 2015 |
| Předmět: |
Economics and Econometrics
Stimulus (economics) Economic policy jel:E62 media_common.quotation_subject Monetary policy jel:E60 Government debt jel:E00 jel:E66 Monetary economics Economic stagnation Recession jel:F00 Interest rate Political Science and International Relations jel:O10 jel:N00 Economics Japan recession crisis crisis therapies monetary expansion Keynesian fiscal stimulus recapitalization of financial institutions public debt economic stagnation boom-and-bust Europe fiscal policies interest rate Recapitalization Finance Economic bubble media_common |
| Zdroj: | Asian Economic Papers. 14:124-150 |
| ISSN: | 1536-0083 1535-3516 |
| DOI: | 10.1162/asep_a_00327 |
| Popis: | Japan experienced a boom-and-bust cycle in the real estate and stock markets almost 20 years earlier than Europe. Since the bursting of the Japanese bubble economy, the country has fallen into a deep recession and has experimented with crisis therapies in the form of unconventional monetary expansion, Keynesian fiscal stimulus, and recapitalization of financial institutions. Japan reached a low interest rate environment in the mid 1990s and has accumulated an exceptionally high level of public debt during more than two decades of economic stagnation. This paper compares the boom-and-bust cycles in Japan and Europe with respect to the reasons for excessive booms, the characteristics of the crises, and the (potential) effects of the crisis therapies. It is argued that in both Japan and Europe the consequences of expansionary monetary and fiscal policies include the hysteresis of a low-interest rate and high government debt environment, the erosion of the allocation and signaling functions of the interest rate, the gradual quasi-nationalization of financial institutions, as well as gradual real income losses. The economic policy implication for Europe and Japan is the timely exit from crisis therapies in the form of excessively expansionary monetary and fiscal policies. © 2015 The Earth Institute at Columbia University and the Massachusetts Institute of Technology |
| Databáze: | OpenAIRE |
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