After many years of false starts, the Japanese economy may finally be set to boom—or at least to enter a period of sustained growth with a sharply rising stock market.

Quantitative easing is a policy that looks good on paper but has a flaw when implemented by a democratic central bank.

How are differences in inflation affecting the Federal Reserve and the Bank of Japan?

Worsening economic conditions will force central banks to resort to more aggressive quantitative easing until the economy recovers.

To the surprise of most Japan-watchers, the Japanese economy continues to recover.

A commitment to low but positive inflation by the Bank of Japanwould enhance the cyclical recovery under way in Japan and improve the chance of better long-term growth prospects.

The year began with substantial optimism and rising equity markets worldwide, but since late January, risk appetite has faded as uncertainties increased even more quickly than expected.

The Bank of Japan must exit quantitative easing and normalize monetary policy with a return to modest positive interest rates.