Is Japan Set to Boom?

"Engineering a successful transition out of deflation is one of the most challenging aspects of monetary policy, but the Bank of Japan just might be able to do it this time." – John Makin, AEI

In his March Economic Outlook, American Enterprise Institute (AEI) economist John Makin examines the recent shift in Japanese monetary policy and answers the question: is Japan set to boom?

Makin finds that:

  • Japan has suffered two "lost decades" of stagnant growth, but new quantitative easing by the Bank of Japan may finally resuscitate the country’s economy.
  • Though stimulating the economy by expanding the money supply is not an ideal course, if Japan allows deflation to persist, its massive debt burden will grow as its economy shrinks and its currency depreciates.
  • Japan's experiment could provide lessons on the effects of quantitative easing for other nations and may offset weak outlooks in the United States and Europe.


John Makin is a former consultant to the US Treasury Department, the Congressional Budget Office, and the International Monetary Fund. He is available for interviews and can be reached at
[email protected] or through his research assistant [email protected].

For help reaching any AEI scholars and for all other media requests, please contact Jesse Blumenthal at [email protected] (202.862.4870).

AEI's in-house ReadyCam TV studio may be booked by calling VideoLink at 617.340.4300. For radio interviews, please e-mail [email protected] to reserve AEI's ISDN facilities.

 

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John H.
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