What about Japan? / Yi-Li Chien, Harold L. Cole, Hanno Lustig.

Format:

Book

Author/Creator:

Chien, Yi-Li.

Contributor:

National Bureau of Economic Research.

Cole, Harold L.

Lustig, Hanno.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31850.

NBER working paper series no. w31850

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

As a result of the BoJ's large-scale asset purchases, the consolidated Japanese government borrows mostly at the floating rate from households and invests in longer-duration risky assets to earn an extra 3% of GDP. We quantify the impact of Japan's low-rate policies on its government and households. Because of the duration mismatch on the government balance sheet, the government's fiscal space expands when real rates decline, allowing the government to keep its promises to older Japanese households. A typical younger Japanese household does not have enough duration in its portfolio to continue to finance its spending plan and will be worse off. Low-rate policies tax younger, poorer and less financially sophisticated households.

Notes:

Print version record

November 2023.