Author: Tanweer Akram
Publisher:
ISBN:
Category :
Languages : en
Pages : 16
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Book Description
During the past two decades chronic fiscal deficits have led to elevated and rising ratios of government debt to nominal GDP in Japan. Nevertheless long-term Japanese government bonds' (JGBs) nominal yields initially declined and since then have stayed remarkably low and stable. This is contrary to the received wisdom of the existing literature which holds that higher government deficits and indebtedness shall exert upward pressures on nominal yields. This paper examines the relationship between JGBs' nominal yields and short-term interest rates and other factors, such as low inflation and persistent deflationary pressures and tepid growth. It is also argued that Japan has monetary sovereignty, which gives the Government of Japan the ability to service its debt and enables the Bank of Japan (BOJ) to keep JGBs' nominal yields low by ensuring that short-term interest rates are low and by using various other tools of monetary policy. The argument that short-term interest rates and monetary policy are the primarily drivers of long-term interest rates follows Keynes's (1930) insights.
Author: Tanweer Akram
Publisher:
ISBN:
Category : Government securities
Languages : en
Pages : 29
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Book Description
Author: Tanweer Akram
Publisher:
ISBN:
Category : Government securities
Languages : en
Pages : 30
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Book Description
Author: Tanweer Akram
Publisher:
ISBN:
Category : Fiscal policy
Languages : en
Pages : 54
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Author: Mr.Waikei W. Lam
Publisher: International Monetary Fund
ISBN: 1463927266
Category : Business & Economics
Languages : en
Pages : 19
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Book Description
Despite the rise in public debt, Japanese Government Bond (JGB) yields have remained low and stable, supported by steady inflows from the household and corporate sectors, high domestic ownership of JGBs, and safe-haven flows from heightened sovereign risks in Europe. Over time, however, the market's capacity to absorb new debt will likely shrink as population ages and risk appetite recovers. In the short term, a decline in fund supply from the corporate sector, where financial surpluses are abnormally high, and spillovers from global financial distress could push up JGB yields. Fiscal reforms to reduce public debt more quickly and lengthen the maturity of government bonds will help limit these risks.
Author: Tanweer Akram
Publisher:
ISBN:
Category : Bond market
Languages : en
Pages : 52
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Book Description
This paper models the dynamics of Japanese government bond (JGB) nominal yields using daily data. Models of government bond yields based on daily data, such as those presented in this paper, can be useful not only to investors and market analysts, but also to central bankers and other policymakers for assessing financial conditions and macroeconomic developments in real time. The paper shows that long-term JGB nominal yields can be modeled using the short-term interest rate on Treasury bills, the equity index, the exchange rate, commodity price index, and other key financial variables.
Author: Mr.Serkan Arslanalp
Publisher: International Monetary Fund
ISBN: 1484374215
Category : Business & Economics
Languages : en
Pages : 26
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Book Description
This paper examines how Japan’s long-term interest rates and Japanese banks’ interest rate risk exposures may evolve under Abenomics. Results from a panel regression analysis for major advanced economies shows that long-term government bond yields in Japan are determined to a large extent by growth and inflation outlook, fiscal conditions, demography, and the investor base of government securities. A further deterioration of fiscal conditions would push up long-term rates by about 2 percentage points over the medium term, but the rise is partly offset by higher demand for safe assets amid population aging and increased purchases by the Bank of Japan. At the same time, illustrative scenarios suggest the interest rate risk exposure of Japanese banks could decline substantially over the next two years. However, if structural and fiscal reforms are incomplete, both long-tem yields and interest-risk exposures of Japanese banks could increase over the medium term.
Author: John Y. Campbell
Publisher:
ISBN:
Category :
Languages : en
Pages : 64
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Author: Naoyuki Yoshino
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
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.
Author: Mitsuhiro Fukao
Publisher:
ISBN:
Category : Banks and banking
Languages : en
Pages : 40
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