Economics, Econometrics and Finance
4 years ago

Japan's Economy Faces Challenges with Natural Interest Rate at 0%

Supplementary Paper Series for the "Comprehensive Assessment" (2): Developments in the Natural Rate of Interest in Japan
Shigeaki Fujiwara, Yuto Iwasaki, Ichiro Muto, Kenji Nishizaki, Nao Sudo

Paper Summary

The natural rate of interest in Japan is estimated to be around 0 percent. This rate is the real interest rate where economic activity and prices stay stable. To measure the effects of monetary easing, researchers estimated the natural rate of interest using different methods. The results show that Japan's natural rate of interest is currently low, suggesting that the real interest rate is likely below this level.

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