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(From Journal of Japanese Trade & Industry (JJTI))
Byline: NOGUCHI, Yukio
It is widely claimed that the fundamental cause of the long lasting stagnation of the Japanese economy since the 1990s is deflation. Based on this belief, ultra-loose monetary policies have been pursued for considerably long periods since the 1990s. In addition, such policies as the adoption of an "inflation target" have been proposed. Newspapers and magazines, as well as politicians, business persons and economists have unanimously been claiming that coping with deflation is the most important and urgent policy issue.
In this paper, I will argue that these beliefs and ...