## Reflating Japan: Time to Get Unconventional?

_IMF Working Papers, August 2, 2016_

## Source details

**Canonical URL:** [Reflating Japan: Time to Get Unconventional?](https://www.imf.org/en/publications/wp/issues/2016/12/31/reflating-japan-time-to-get-unconventional-44162)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/reflating-japan-time-to-get-unconventional-44162/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/reflating-japan-time-to-get-unconventional-44162/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/reflating-japan-time-to-get-unconventional-44162/bundle-manifest.json)

## Bibliographic details
- Authors: Elif C Arbatli Saxegaard, Dennis P Botman, Kevin Clinton, Pietro Cova, Vitor Gaspar, Zoltan Jakab, Douglas Laxton, Constant A Lonkeng Ngouana, Joannes Mongardini, Hou Wang
- Published: August 2, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475523140.001

---

### Summary and stated goals
- Japan's stated economic goals: 3 percent nominal growth; 2 percent inflation; and a primary budget surplus.
- Abenomics has employed the three arrows of monetary, fiscal and structural policies, but the goals remain out of reach.

### Proposed policy framework
- Embed countercyclical measures in long-run frameworks that anchor expectations for inflation and public debt.
- Implement an incomes policy to assist reflation.

### Model simulations and comparative assessment
- Model simulations suggest that the combined proposals (countercyclical measures within long-run frameworks + incomes policy) would make headway towards the goals.
- From a risk-return perspective, the combined proposals offer, on balance, a better chance of success than the more unconventional policy alternatives proposed by Krugman, Svensson, and Turner.

### Key themes and emphases
- Focus areas: deflation, fiscal policy, inflation, inflation targeting, labor and labor markets, monetary policy, prices.
- Keywords emphasized by the authors include: BoJ inflation target; incomes policy; inflation expectation; inflation guideline; wage inflation guideline; wage inflation target; wage-price dynamics; wage-push inflation; structural reforms; wage growth; output gap; private sector.

### Policy implications and recommendations
- Anchor inflation and public debt expectations through long-run frameworks that incorporate countercyclical policy elements.
- Complement macro frameworks with an incomes policy to help achieve reflationary objectives.
- Consider the risk-return trade-offs of highly unconventional alternatives versus a combined approach of anchored frameworks and incomes policy.

*Source: IMF Working Paper “Reflating Japan: Time to Get Unconventional?”, authors Elif C Arbatli Saxegaard et al., August 2, 2016.*

---

## Content in this bundle

- **Reflating Japan: Time to Get Unconventional?**
  - [Reflating Japan: Time to Get Unconventional? (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2016/_wp16157.pdf.md){rel="alternate" type="text/markdown"}
  - [Reflating Japan: Time to Get Unconventional? (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2016/_wp16157.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/reflating-japan-time-to-get-unconventional-44162_