This category focuses largely on matters pertaining to Japan
This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions.
This is a third part of an as yet unknown total, where I investigate possible new policy agendas, which are designed to meet the challenges that Japan is facing in the immediate period and the years to come. The first two parts were written in the context of the elevation of Ms Takaichi to the LDP presidency. It was anticipated that she would then become the Prime Minister as a result of commanding a majority on the floor of the Diet, with help from long-standing coalition partner Komeito. However, in the last few days, things have changed considerably in Japan with Komeito withdrawing from the ruling coalition and throwing the question of who will become the Prime Minister up in the air. One of the issues that are shaping what happens next is the question of social security sustainability as the society ages. This divides the parties and will help to determine the configuration of the next government in Japan.
This is a second part of an as yet unknown total, where I investigate possible new policy agendas, which are designed to meet the challenges that Japan is facing in the immediate period and the years to come. This is also in the context of the elevation of Ms Takaichi to the LDP presidency and soon Prime Minister. She has suggested that her policy agenda will shift somewhat from the current government position, in the sense that she wants lower interest rates, while the majority of economists want higher, and she is advocating further fiscal expansion, while the mainstream want austerity. In the first part I examined the inflation issue in Japan, which suggests that the mainstream view that rates have to rise is misguided. Today, I am considering the scope for fiscal expansion.
This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions
This will be a series of blog posts where I analysis the period ahead for Japan under the new LDP leadership of Ms Sanae Takaichi. The motivation is that on November 7, 2025, the research group I am working with at Kyoto University will be staging a major event at the Diet (Parliament) Building in Tokyo where I will be one of the keynote speakers. The strategic intent of the event is to outline a new policy agenda to meet the challenges that Japan is facing in the immediate period and the years to come. It is highly likely that the Lab Director here at Kyoto, who promotes and Modern Monetary Theory (MMT) perspective and was formerly the special advisor to the Shinzo Abe, will return to that position under Ms Takaichi. This gives the event increased importance for outlining an Modern Monetary Theory (MMT)-based perspective. Today, I examine the inflation issue in Japan.
This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions
On September 19, 2025, the Bank of Japan issued its latest – Statement on Monetary Policy – where they announced that there would be no change in the overnight call rate (the policy rate). However, they also announced that they would begin selling off their holdings of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs). Many people are unaware of what these assets are and why the Bank of Japan would be holding them. Further, the media went wild and the Japanese share market gyrated (down) upon the news, suggesting that there was something significant going on or that the ‘markets’ are just dumb. It was the latter by the way. However, this has become an issue in Japan and this blog post is about sorting through the nonsense.
This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan but who over the years of working here has increasingly began to understand the language and local cultural traditions.
This week (July 29, 2025), the Cabinet Office in Tokyo released the Economic and Fiscal Report – 年次経済財政報告 – which is a comprehensive statement of where the Economic and Fiscal Policy Ministry thinks the Japanese economy is going and the challenges it faces. It is a long and very thorough document. But like many official documents that the Japanese government publishes, it reads quite unlike what other governments that are sort of in IMF-spin mode pump out. The fundamental takeaway from reading the Report is that the Japanese government is still uncertain about whether the country has evolved out of its deflationary mindset and become a ‘growth-oriented’ nation driven by real wages growth. There is certainly criticism (implied in the Japanese fashion) for corporations sitting on large cash assets who are underinvesting in local productive capital. But the overwhelming hope of the government is that the nascent wage increases that have been offered mostly by the large major corporations continue and spread throughout the economy into the dominant small and medium enterprises. Most governments are still in the corporate cost-cutting mindset – thinking that is somehow how productivity and improved material well-being will occur. So their foci is on deregulation and attacking trade unions and that sort of ‘supply side’ nonsense. The Japanese government is firmly banking on a consumer-led, domestic economy growth strategy fostered by extensive wage rises outstripping the growth in prices.
The global financial press think they are finally on a winner (or should that be loser) when it comes to commentary about the Japanese economy. Over the last few years in the Covid-induced inflation, the Japanese inflation rate has now consolidated and it is safe to say that the era of deflation is over. Coupled with the government (and business) goal of driving faster nominal wages growth to provide some real gains to offset the long period of wage stagnation and real wage cuts, it is unlikely that Japan will return to the chronic deflation, which has defined the long period since the asset bubble collapsed in the early 1990s. It thus comes as no surprise that longer-term bond yields have risen somewhat. But apparently this spells major problems for the Japanese government. I disagree and this is why.