The Crisis that Wasn’t: How Japan Has Avoided a Bond Market Panic
- The Crisis that Wasn’t: How Japan Has Avoided a Bond Market Panic
- Greenan, Mark T.
Weinstein, David E.
- Center on Japanese Economy and Business
- Persistent URL:
- Center on Japanese Economy and Business Working Papers
- Part Number:
- Geographic Area:
- Center on Japanese Economy and Business, Graduate School of Business, Columbia University
- Publisher Location:
- New York
- This paper explores the history of Japanese fiscal policy over the past two decades with the aim of better understanding where previous forecasts have erred. As such, Japan provides an important case study of how a country facing intense fiscal pressures can avoid a hyperinflation or financial panic. We find that there were three key forces that likely improved Japan’s fiscal situation relative to more pessimistic predictions. First, the Japanese government has shown remarkable ability to hold down per capita expenditures on social pensions and healthcare. Second, the Japanese government has been able to raise taxes substantially. Third, the remarkable monetary policy pursued by the Bank of Japan has resulted in a dramatic decline in the amount of government bonds held by the private sector.
- Fiscal policy
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- Suggested Citation:
- Mark T. Greenan, David E. Weinstein, 2017, The Crisis that Wasn’t: How Japan Has Avoided a Bond Market Panic, Columbia University Academic Commons, https://doi.org/10.7916/D88S52HW.