S5 Ep14: Backstage: Japan’s inflation problem and monetary policy options

Bruegel senior fellow Zsolt Darvas welcomes Sayuri
Shirai, professor at Keio University, visiting scholar at the
Asian Development Bank Institute and former Member of the Policy
Board of the Bank of Japan (BOJ), for a discussion of the
Japanese monetary policy outlook.


Japan is often portrayed in the economic circles as a country
facing decades of loss, as it has long been experiencing slow
economic growth and sluggish underlying inflation, despite
numerous attempts at boosting it.


The ambitious plan designed to do just that is known as
‘Abenomics’, a macroeconomic package advocated by Japan’s Prime
Minister Shinzō Abe, based upon the ‘three arrows’ of monetary
easing, fiscal stimulus and structural reforms.


To evaluate the outcomes of the Abe’s policies and explore the
challenges facing Japanese economy, Bruegel senior fellow Zsolt
Darvas welcomes Sayuri Shirai, professor at Keio University,
visiting scholar at the Asian Development bank institute and
former Member of the Policy Board of the Bank of Japan.


The discussion touches upon the reasons why target inflation is
so hard to achieve, including the issue of stagnant wages and low
labour productivity, especially in the context of Japan’s aging
society. It also reflects on the Bank of Japan’s monetary easing
normalisation, and whether it is feasible for it to tamper its
massive government bond purchases.


For further reading, you might consider a blog post by Akio Egawa
on the third arrow of Abenomics – a growth strategy. We can also
recommend our recent round up of economists’ opinions on the past
years of Abe’s policies.