Policies and Prospects in Japan and the Implications for the Asia-Pacific Region

September 1, 2001

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Tim Callen, and Warwick J. McKibbin Policies and Prospects in Japan and the Implications for the Asia-Pacific Region, (USA: International Monetary Fund, 2001) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper uses the G-Cubed (Asia-Pacific) model-a macroeconomic model with rich cross-country links-to explore the implications for Japan and Asia of several shocks to the Japanese economy. The results suggest that, while fiscal consolidation in Japan would initially dampen domestic growth, over the medium term the impact on both the domestic and regional economies would be positive. Quantitative monetary easing in Japan would boost domestic activity in the short-run, while being basically neutral for the region. Finally, a loss of confidence in the yen would be negative for Japan, but positive for the region because of a reallocation of capital flows toward non-Japan Asia.

Subject: Expenditure, Exports, Financial services, Fiscal consolidation, Fiscal policy, Imports, International trade, Real interest rates, Stocks

Keywords: Asia and Pacific, Asia-Pacific region, BoJ purchase, Depreciation of the yen, Equity price, Europe, Exports, Fiscal consolidation, Foreign direct investment, Imports, Imports of machinery, Japan, Macroeconomic model, Price, Price effect, Real GDP, Real interest rate, Real interest rates, Role Japan, WP, Yen depreciation

Publication Details

Pages:

57
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/131
Stock No:

WPIEA1312001
ISBN:

9781451855289
ISSN:

1018-5941

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