The purchase of united states government bonds by japanese investors will be included in japan’s

In April 2013, the Bank of Japan (BOJ) introduced an inflation target of 2% with the aim of overcoming deflation and achieving sustainable economic growth. But due to lower international oil prices, it was unable to achieve this target and was forced to take further measures. Hence, in February 2016, the BOJ adopted a negative interest rate policy by massively increasing the money supply through purchasing long-term Japanese government bonds (JGB). The BOJ had previously purchased short-term government bonds mainly, a policy that flattened the yield curve of JGBs. On the one hand, banks reduced the numbers of government bonds because short-term bond yields had become negative, and even the interest rates of long-term government bonds up to 15 years became negative. On the other hand, bank loans to the corporate sector did not increase due to the Japanese economy’s vertical investment–saving (IS) curve. Firstly, we explain why the BOJ has to reduce its 2% inflation target in the present low oil price era. Secondly, we argue that Japan cannot make a sustainable recovery from its long-lasting recession and tackle its long-standing deflation problem by means of its current monetary policy and its negative interest rate policy in particular. It is of key importance to make the IS curve downward sloping rather than vertical. That means the rate of return on investment must be positive and companies must be willing to invest if interest rates are set too low. Japan’s long-term recession is due to structural problems that cannot be solved by its current monetary policy. The last section reports our simulation results of tackling Japan’s aging population by introducing a productivity-based wage rate and postponement of the retirement age, which will help the recovery of the Japanese economy.

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Which of the following would cause the United States dollar to increase in value?
Which of the following would be most likely to occur if the United States placed high tariffs?
Which of the following will lead to an increase in the United States net exports?
When the dollar appreciates against the yen?

WORKING PAPER NO: 652

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The International Economic Review was established in 1960 by two of the most active and acclaimed scholars in the economics profession: Michio Morishima, who was then at Osaka University's Institute of Social Economic Research (ISER), and Lawrence R. Klein, who was then at the University of Pennsylvania's Wharton School and Department of Economics. The goal was to provide a forum for modern quantitative economics. From its inception, the journal has tried to stimulate economic analysis by publishing cutting-edge research in many areas, including econometrics, macroeconomics, theory, and applied economics. The International Economic Review initiates the use of this electronic medium as a continuation of our mission to promote and disseminate economic research. The IER is now run as a non-profit joint academic venture between Osaka University's Institute of Social and Economic Research and the University of Pennsylvania's Department of Economics. IER Website: http://www.econ.upenn.edu/ier Contact: Michele Souli JSTOR provides a digital archive of the print version of International Economic Review. The electronic version of International Economic Review is available at http://www.interscience.wiley.com. Authorized users may be able to access the full text articles at this site.

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Which of the following would cause the United States dollar to increase in value?

Answer and Explanation: The correct answer is d) The inflation rate in the United States is low relative to other countries. The low inflation rate in the United States relative to other countries would increase the value of the dollar.

Which of the following would be most likely to occur if the United States placed high tariffs?

Which of the following would be most likely to occur if the United States placed high tariffs on imported goods? Explanation: High tariffs would protect less efficient domestic producers from foreign competition.

Which of the following will lead to an increase in the United States net exports?

The correct answer is choice (a) The price level in other countries increases faster than in the U.S. Faster increase in price level in foreign countries relative to those in U.S. will make U.S goods relatively cheaper than world goods and services. This will increase U.S exports thus making net exports to increase.

When the dollar appreciates against the yen?

If the rate increases to 110, then one U.S. dollar now buys 110 units of Japanese yen and thus appreciates. As a rule of thumb, the increase or decrease of a rate always corresponds to the appreciation/depreciation of the base currency, and the inverse corresponds to the quoted currency.