تورم منفی قیمت و مصرف : سیاست بانک مرکزی و رکود اقتصادی و مالی ژاپن

In this paper we review the major causes of Japan’s economic and financial stagnation during the past decade, considering in particular how past policies of the Bank of Japan have generated the current deflationary environment. This paper does not attribute Japan’s economic and financial distress entirely to Bank of Japan policy nor does it fail to recognize the shift in policy starting March 2001 when the Bank shifted toward a policy of “quantitative easing” that generated a significant increase in the growth of high powered money by late 2002. The paper argues the Bank’s deflationary policies starting in the mid-1990s up to late 2002 exacerbated the distress and it remains to be seen whether the new policy will reverse deflationary expectations. We consider the economic effects of the deflation, and in particular we argue for a link between expected deflation when nominal interest rates approach their lower bound and a decline in consumption. We find some initial evidence for this hypothesis using both a simple two-period model with a simulation and estimates of consumption functions for both the United States and Japan. Reinflation is thus a necessary, though not a sufficient condition for Japanese economic recovery.

Japan’s economic and financial malaise has been extensively documented.1 Despite much research effort and the lack of success of the numerous fiscal, monetary, and regulatory policy responses, including institutional redesign efforts and attitudinal changes by Japanese policy makers, debate persists over the causes of Japan’s downturn, the causes of the continued stagnation, and the set of policies that will return Japan to sustained economic growth. Some view Japan’s problems from a broader perspective. Krugman (2000), for example, argues that Japan is a leading indicator of “depression economics”, that liquidity traps will increasingly confront policy makers, and that a new government paradigm is required to deal with these problems in the future. The apparent lack of consensus reflects the more general difficulty of assigning responsibility for the cause of any major economic event. First, the impact of any exogenous shock to the system, such as the Bank of Japan’s decision in May 1989 to initiate a tight money policy, is dependent on the existing structural characteristics of the real and financial sectors. Even if one can identify an initiating exogenous shock, it is not easy to assign causal importance to the shock since other shocks might have generated a similar response. Second, the causes of Japan’s economic and financial malaise multiply in number and complexity as the problems persist. The longer lasting the problem, the more the problem becomes embedded throughout various sectors of the economy, the more difficult to identify any small set of causes, and the more difficult it becomes to reverse the process. This paper, however, takes the view that despite the difficulty of assigning the status of “cause” to any one or small group of factors, the broad causative outline of Japan’s stagnation can be identified and that a necessary, but not sufficient, condition for recovery can be identified. The paper specifically focuses on Bank of Japan policy, the gradual but definite decline in the price level, and the effect deflation has had on consumption spending. The remainder of the paper is composed of five sections. In Section II, we present a causal outline of Japan’s economic and financial stagnation drawn from the exiting literature. Section III summarizes the evidence that Bank of Japan policy has been insufficiently stimulative and as a result, has permitted the price level to fall after 1995. Section IV focuses on the link between deflation and aggregate demand from three perspectives: (1) a simple two-period theoretical model that illustrates why even if deflation is anticipated, consumption spending will likely decline; (2), a simulation of the theoretical model to illustrate how consumption spending responds to deflation; and (3), estimates of two consumption functions that suggest an empirically meaningful relationship between deflation and consumption spending in Japan. The theoretical and empirical model are not complex, but suggest that there is a link between deflation, even when anticipated, and consumption. To the extent central bank policy is responsible for the deflation process, the economy cannot recover until a reinflation process policy is adopted. A concluding section ends the paper with some observations on the political economy of Bank of Japan policy.

The causes of Japan’s stagnation are many and complex. No one factor or group of factors can be assigned the cause at this point in time given that Japan’s stagnation has continued for almost fifteen years. However, in a broad outline of why the downturn occurred and the stagnation has continued, the Bank of Japan’s willingness to permit disinflation in the first part of the 1990s and deflation after 1995 has contributed importantly to Japan’s problems. Price deflation has generated a difficult, discontinuous environment for the Bank of Japan making easy monetary policy more difficult and contributing to further deflation as households adjust their portfolios toward money and away from goods and services. The deflation has also contributed to a decline in aggregate demand by postponing consumption in the short run in response to the increase in the real rate of interest. Reversing the decline in prices is not a sufficient condition for Japan’s recovery, but it is a necessary condition. The recent changes in Bank of Japan policy in late 2002 and new leadership in early 2003 may yield a more aggressive policy, but there is little doubt that Bank of Japan policy by allowing the price level to fall has constrained recovery. Bank of Japan policy has generated much discussion both inside and outside of Japan and while there is widespread consensus central bank policy has been insufficiently expansionary (with the exception of Bank of Japan officials), there is less agreement as to what accounts for this policy especially in light of the Bank of Japan’s more independence design that became effective April 1, 1998. Of the several possible explanations, Cargill et al. (2000) and Cargill and Parker (2003) emphasize the public choice implications of independence itself as a possible constraint on the Bank’s unwillingness to respond to outside pressure for more aggressive ease. Such response to outside pressure, no matter how responsible the pressure, would render the Bank of Japan less “independent”. Institutional response by the Bank of Japan, however, did shift in early 2001 and by late 2002 monetary policy shifted toward greater ease in terms of the growth of high powered money. Toshihiko Fukui, the new Bank of Japan Governor since March 2003, has continued this policy. Increasing outside criticism of the Bank of Japan’s policies, public comments made by Prime Minister Koizumi in early 2003 about the need for a “deflation fighter” when considering the new Governor to replace the retiring Governor Hayami and suggestions by some Diet members that it was time to impose an inflation-target framework on the Bank of Japan may have provided the incentives for the Bank of Japan to shift policy toward greater ease. There is general agreement, however, that the recent policy shift should be maintained and even more aggressive action should be considered, as one governor of the Federal Reserve Bank has clarified (Bernanke, 2003). It remains to be seen how monetary policy will develop in the near future, but unless the Bank of Japan reverses deflationary expectations, Japan may find it very difficult to continue its recent growth and solve the many structural problems of the economy. There are many ways deflation has an adverse impact. This paper has focused on the deflation-consumption channel and until deflationary expectations are reverse, consumption spending will restrain economic recovery.