We develop new economic policy uncertainty (EPU) indices for Japan from January 1987 onwards building on the approach of Baker, Bloom and Davis (2016). Each index reflects the frequency of newspaper articles that contain certain terms pertaining to the economy, policy matters and uncertainty. Our overall EPU index co-varies positively with implied volatilities for Japanese equities, exchange rates and interest rates and with a survey-based measure of political uncertainty. The EPU index rises around contested national elections and major leadership transitions in Japan, during the Asian Financial Crisis and in reaction to the Lehman Brothers failure, U.S. debt downgrade in 2011, Brexit referendum, and Japan's recent decision to defer a consumption tax hike. Our uncertainty indices for fiscal, monetary, trade and exchange rate policy co-vary positively but also display distinct dynamics. VAR models imply that upward EPU innovations foreshadow deteriorations in Japan's macroeconomic performance, as reflected by impulse response functions for investment, employment and output. Our study adds to evidence that credible policy plans and strong policy frameworks can favorably influence macroeconomic performance by, in part, reducing policy uncertainty. JEL Classification Numbers: D80, E20, E52, E62, F13

for very useful comments and suggestions and Yihan Liu for excellent research assistance. We are especially grateful to Ikuo Saito, who was a coauthor on an earlier draft. Steven J. Davis gratefully acknowledges financial support from the U.S. National Science Foundation and the Booth School of Business at the University of Chicago. The views expressed in this paper are those of the author(s) and do not necessarily represent the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

All industrialized countries are grappling with a common problem—how to provide assistance of various kinds to their rapidly aging populations. The problem for countries searching for models of efficient and high-quality long-term care (LTC) policies is that fewer than a dozen countries have government-organized, formal LTC policies. Relatively new surveys focused on the elderly populations of about 25 countries could become the basis for research on which LTC policy design choices have desired outcomes for individuals and society and might be replicable in other countries. As in earlier decades when U.S. researchers created the Current Population Survey (CPS) modules and the Survey of Income and Program Participation to answer policy questions, researchers and policy analysts are now at a point where a concerted effort is needed to generate questions that international comparative research on LTC could answer as well as the data needed to address the questions.

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Data and anecdotal evidence suggest that Japan is suffering from labor shortages, which are large in an international perspective, have a negative impact on potential growth, and reduce the effectiveness of monetary and fiscal stimulus. This paper focuses on policy options to ease Japan's labor shortages. In particular, we focus on possible measures to increase reliance on foreign labor. Other policy recommendations to deal with shortages include policies aimed at increasing female labor participation, encouraging wage growth, increasing investment, as well as training and other active labor market policies.