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No.38
No.38 ,Economy  Apr 11, 2017

Evaluating the “Comprehensive Assessment of Monetary Policy”
Continued Easing To Overshoot 2% Inflation ― Introducing Short-Term and Long-Term Interest Rate Control

< Key Points > Deflation has been eliminated through large-scale monetary easing There is increased confidence in the ability to hit 2% inflation with an extraordinary commitment The formation of optimum interest rates is being encouraged in light of financial circumstances At its Monetary Policy Meeting held last week, the Bank of Japan undertook a comprehensive assessment of the monetary easing policies it has pursued to date and in light of the results, introduced a new framework of “Quantitative and Qualitative Monetary Easing with Yield Curve Control.” Money Supply in Japan, United States and Europe Source: Cabinet Office, Bank of Japan, FRB, BEA, ECB, Eurostat Three years ago, the Bank of Japan set the “price stability target” at 2% in terms of the year-on-year rate of change in the consumer price index, and to achieve this, introduced a policy of “quantitative and qualitative monetary ... ... [Read more]

No.38
No.38 ,Economy  Apr 11, 2017

Do expectations raise prices?
Expectations Have Hardly Had Any Impact on Wages, The Key Factor 
― Deflation is not a monetary phenomenon

< Key Points > The postponement of the timing of achieving the price target indicates the failure of the “different dimension” of easing. Expectations are not taken into consideration when prices and wages are determined. It is not the quantity of money but oil prices that cause prices to change. The “different dimension” of monetary easing that started in April 2013 has failed to achieve its target: a core CPI (all items less fresh food) inflation rate of 2% in two years. The latest core CPI inflation rate was negative 0.4%. This rate is lower than the level towards the end of the term of office of the former BOJ Governor Shirakawa Masaaki. Finally, at the Monetary Policy Meeting held on 1 November 2016, the Bank of Japan postponed the timing for achieving the 2% price target from “during FY2017” to “around FY2018.” The ... ... [Read more]

No.38
No.38 ,Economy  Apr 09, 2017

Evaluating the “Comprehensive Assessment of Monetary Policy”
The Preoccupation with Rationalization of the New Framework ― Messaging Lacks Introspection

< Key Points > There is a limit to demand brought-forward through monetary easing Fixing long-term interest rates is indivisible from Japanese government bond (JGB) management policy Improve messaging when trying to manage market expectations Quantitative and qualitative monetary easing (“QQE”) was a “decisive battle of brief duration” designed to achieve the two-percent inflation target within two years. But now three-and-a-half years after its introduction, since we still have a negative inflation rate and there is no reliable outlook for when that target will be achieved, the question of how to reorganize into a protracted battle has attracted considerable interest. *** *** In the “comprehensive assessment” it announced on September 21, the Bank of Japan asserted that with the natural rate of interest following a downward trend, it would need toraise inflation expectations, and in doing so further lower real interest rates. In light of ... ... [Read more]

No.37
No.37 ,Economy  Apr 06, 2017

A Big Problem After All: President Trump’s Trade Policies

US President Donald Trump’s comments regarding trade are drawing anxious concern from all directions. Certainly, upon checking President Trump’s various comments from an economics-based standpoint there are many mistakes to be found; and the possibility of those mistakes having a real and significant negative impact on global trade is now increasing. The Two Types of Mistakes in Trump’s Views on Trade As far as I can see, we can divide the mistakes in the newly inaugurated President Trump’s views on trade into two main types. The first type of mistake is the clear and obvious type, which everyone can point out. A textbook example would be his assertions about protective trade. Trump insists that the influx of imported goods from overseas is robbing Americans of employment opportunities domestically. This naturally leads us to a policy of restricting imports in order to protect domestic employment; ... ... [Read more]

No.37
No.37 ,Economy  Mar 26, 2017

Declining birthrate widespread across Asia
A Key Policy Is Support for Balancing Work with Childcare ― Need to increase family-related expenditure

< Key Points > There are some countries with lower birthrates than Japan, such as South Korea and Thailand. Family-related expenditure is extremely low in Japan. It is significant that the government has set a goal for the birthrate. The number of births in 2015 was estimated at 1,008,000, which was the first increase in five years. For the first time since World War II, however, the number of deaths exceeded 1,300,000, which resulted in a natural population decline for the ninth consecutive year. Although it showed an increase, the number of births is still as many as around 200,000 fewer than 20 years ago, when the current college students were born. The trend of the declining birthrate has not improved, and it is anticipated that the population decline will accelerate further in the future. An accurate figure for the total population of Japan ... ... [Read more]

No.36
No.36 ,Economy  Nov 11, 2016

Significance of Free Trade: Continued Trade Negotiations will Allow for New Progress
―Distinguish between internationalization and people, goods, and money

< Key Points > Avoid discussions about the internationalization of people, goods, and money in the same light. The stronger the movement towards trade liberalization becomes, the larger the backlash grows. History shows that protectionism does not provide desirable results. “We looked for an overseas labor source, but those who arrived were people,” said a Swiss writer commenting on the effects of the foreign work force. When considering labor power only as a production factor, it appears logical to seek cheap overseas labor. But this will involve a variety of human factors, such as families, religions, cultures, and crimes, creating a number of difficult issues.  With statements made by U.S. Presidential candidate Donald Trump and the United Kingdom’s referendum decision to leave the European Union (EU), voices that oppose the development of globalization have been growing louder. However, close examinations of these trends show ... ... [Read more]

No.35
No.35 ,Economy  Oct 26, 2016

What is needed to counter the falling birthrate? The short cut is to rectify the long working hours
―A solution in the style of the United States/Northern Europe is difficult

< Key Points > Countries that have brought the falling birthrate under control have transformed the male breadwinner model The cost of childcare presents a challenge to promoting support for work-life balance Active women and improved ways of working for men are one and the same In 2015, the total fertility rate (an estimate of the number of children born to a woman during her lifetime) was 1.46, a recovery of 0.2 points from the lowest ever rate of 1.26 recorded in 2005. Since the birthrate for women aged 25 to 29 is also on the upswing, these trends are likely the result of the recent improvements in the economy and in the work-life balance. However, these numbers fall far short of the figure of 1.8 that the Abe administration has set as the target for 2025. There is also a wide gap with ... ... [Read more]

No.35
No.35 ,Economy  Oct 25, 2016

What is needed to counter the falling birthrate?  Bold funding investments are urgent
―Salaries for nursery school teachers and tuition fee support

komamura Kohei, Professor, Keio University

< Key Points > Increasing the birthrate is not likely to substantially increase the number of births. The stagnation in the 1990s and 2000s is a failure of historical proportions. Improve student loan payments and the income-pegged repayment model The Population Section at the Ministry of Health, Labour and Welfare have started to discuss the new population projections. The new population projections will likely be announced in the first half of next year. Population projections are based on the census and carried out at intervals of roughly five years to estimate the population over the next fifty years (one hundred years in case of consultation projections). The results form the basis for pension financing and social security policies, including medical and nursing care, but the socio-economic impact is also significant as the data are consulted for local government policy and for future planning at ... ... [Read more]

No.35
No.35 ,Economy  Oct 22, 2016

Abenomics at a Watershed
―Proper Approach to Monetary Policy

Komine Takao, Professor, Department of Regional Development, Taisho University

One of the main topics people have discussed since the start of Prime Minister Abe’s second term in December 2012 is the government’s economic policy, which is commonly referred to as Abenomics. Nearly three and half years have passed since then, and now it seems that the initial form of Abenomics has been driven to take a major change in direction. In this paper, I will discuss Abenomics, focusing primarily on its monetary policy. This particular area has been forced to take a different turn because the limitations of the policy’s stance in the past are now apparent. Abenomics is beginning to lose touch with its goals It is easier to assess Abenomics by dividing it into two periods. The first period runs from the inauguration of the first Cabinet of Prime Minister Abe to March 2014, a period during which the economy remained ... ... [Read more]

No.35
No.35 ,Economy  Oct 20, 2016

The “Pokémon GO” Bubble:
Expectations and Anxiety for

Large number of Pokémon Trainers gathered in Ueno Park in the midnight of August 2, 2016. Same phenomenon could be seen all over the nation.

July 25 (Monday), 7:00 p.m. Even though it’s a weekday night, the view at Kinshi Park in Tokyo’s Sumida Ward is an unusual one. Hundreds of people are gathered here, some of them business people on their way home from the office. Almost everyone has a smartphone in hand, and they’re all wandering around in silence, not saying a word. The game everyone’s playing is “Pokémon GO.” At Kinshi Park, Osaka Park, and Tsuruma Park (in the city of Nagoya), there are large numbers of “Pokestops,” locations where players can acquire items for use in capturing monsters. Kinshi Park in particular has gotten a lot of attention on Twitter as a place where players can catch one of the rare monsters, “Bulbasaur,” and large numbers of Pokémon Trainers (players) have been attracted to the area.... [Read more]

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