Adam Posen on Japanese fiscal stimulus

The case for continued deficit spending in Japan ended by mid-2003.

…The additional stimulus in Japan is counterproductive because it adds to the long-term costs without addressing Japan’s real problem: a return to deflation and an overvalued exchange rate. The BoJ pursuing a higher inflation target through large-scale purchases of a wide range of assets, as Mr Abe and his economic adviser Koichi Hamada rightly advocate, would be sufficient and appropriate.

Here is much more (FT).  You will note that Posen is in general famous for being an advocate of stimulus for the UK and he is no enemy of Keynesianism or aggregate demand analysis.


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