Policy reform and optimal inflation rate for Japan in computable OLG economy

Shimasawa, Manabu; Sadahiro, Akira

doi:10.1016/j.econmod.2008.08.003

Cited by 4 publications

(5 citation statements)

References 13 publications

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“…The highest deflation rate in Japan was in November 2008 while the highest inflation rate was in April 2014. This thus confirms the analysis of Shimasawa and Sadahiro (2009) that the Yen has risen up since 2009.…”

Section: Data and Descriptive Statisticssupporting

confidence: 86%

“…According to these authors, this disinflation/ deflation was impacted significantly by the demand side and monetary environment. Following Shimasawa and Sadahiro (2009), this deflation was due to a prolonged recession but the Yen seemed to rise up from Japan, 01/1992-02/2015 France, 01/1955-02/2015UK, 12/1978-02/2015USA, 12/1978-02/2015 Notes: For an easier comparison, the base of 100 is fixed at the beginning of the study period. 2009.…”

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

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Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach

2016

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This paper aims to study the role of gold as a hedge against inflation based on local monthly gold prices in China, India, Japan, France, the United Kingdom and the United States of America in periods ranging from 1955 to 2015. We extend the literature by using a novel approach with the nonlinear autoregressive distributed lags (NARDL) model (Shin et al., 2014). The main advantage of this model relies on its ability to simultaneously capture the short-and long-run asymmetries through positive and negative partial sum decompositions of changes in the independent variable(s). Moreover, we rely on local gold prices instead of those from London converted into local currencies like in most of previous studies. The results show that gold is not a hedge against inflation in the long run in all cases. In the short run, gold is an inflation hedge only in the UK, USA, and India. Furthermore, there is no long-run equilibrium between gold prices and the CPI in China, India and France. This difference may be due to traditional aspects of gold and custom controls for gold trade in these countries. Our robustness check suggests that the data time-frequency does not change the specification of the NARDL model but can change conclusions regarding the role of gold as a hedge against inflation in certain countries.

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Section: Data and Descriptive Statisticssupporting

confidence: 86%

Section: Data and Descriptive Statisticsmentioning

confidence: 99%

Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach

2016

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“…This article then compares the effects of fiscal policy options to their impacts on output growth and economic welfare. Shimasawa (2007) developed a computable endogenous growth OLG model with human capital accumulation to investigate the effects of policy reform in the aging economy of Japan. The simulation results indicate that pension reform and fiscal consolidation can promote human capital accumulation and thus accelerate economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impacts of Population Aging on China’s Economy

Hsu

Yoshida

Chen

2022

Global Journal of Emerging Market Economies

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The Chinese economy had an extraordinary average GDP growth rate of 8.50 percent from 1980 to 2018. However, the implementation of one-child policy in the late 1970s has depressed the total fertility rate to below the replacement rate since 1992. China thus experienced an increasing composition of older populations in the past three decades, which puts pressure on Chinese economic growth and makes its eye-catching economic growth potentially unsustainable. This study develops an overlapping generations (OLG) model to investigate the impacts of this demographic transition in the Chinese economy. This study conducts six policy reform exercises to examine measures that could improve the sustainability of fiscal and pension systems. The simulation results indicate that a mild tax increase on either wage income or consumption does not improve the fiscal stance but creates distortionary effects on saving and consumption behaviors. Of the pension reform measures considered, the combination of extending the mandatory retirement age and cutting the replacement ratio offers the most significant improvement to pension sustainability. However, increasing the contribution rate of the working-age population has the least effect on pension sustainability and a noticeable distortionary effect on the consumption ratio and saving rate.

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“…Several studies have been conducted that show the impact of demographic change on monetary policy effectiveness (Miles, 2002;Fujiwara & Teranishi, 2006;Imam, 2013;Wong, 2014;Chen, 2016). Even though we take into account the impact of monetary policy in affecting inflation by setting a government which controls money supply as in Hamann (1992), Shimasawa and Sadahiro (2009) and thereby check for different degrees of government reactions, this topic is not thoroughly investigated in this paper.…”

Section: Related Literaturementioning

confidence: 99%

“…We extend the household's decision problem by adding real money holdings (MIU framework, see Sidrauski (1967)) and a simple government sector that supplies money. We follow Hamann (1992), Shimasawa andSadahiro (2009) andWalsh (2010) when describing the money market and the government's money supply rule. The MIU framework allows for the introduction of a monetary economy into a neoclassical framework and incorporates individuals whose utility depends directly on their consumption of goods and money holdings in the basic neoclassical model.…”

Section: Olg-inflation Modelmentioning

confidence: 99%

The Aging-Inflation Puzzle: On the Interplay between Aging, Inflation and Pension Systems

Härtl

Leite

2018

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractThis paper focuses on the empirically observed relationship between demographic change and inflation and explores the theoretical nature of the puzzling link between the two. It puts the existent disparate empirical findings in the literature into perspective by formalizing an overlappinggenerations (OLG) model containing many of the underlying mechanisms that link demographic change and inflation dynamics. We are the first to formally disentangle the two components of demographic change: population size and structure, and determine how they separately affect inflation. We find that changes in population size are a main driver of inflationary pressures, but changes in population structure play a fundamental role in dampening or boosting inflationary dynamics since size effects are quite stable across the several scenarios tested. The main conclusions show a negative effect of demographic change/aging on inflation. We also conclude that the introduction of a public pay-as-you-go (PAYG) pension system has a negative impact on inflation, but these effects are dampened under general equilibrium conditions and when individuals can respond to changes in their income by adapting their labor supply. A simulation of different stages of demographic change and size of pension systems is carried out for a selected sample of individual countries. Findings suggest that aging countries with generous PAYG pension systems face strong deflationary pressures while countries that face aging but with higher fertility and immigration rates, such as the US, will experience the same deflationary pressures but much later in time. These results reinforce the hypotheses that we are entering a period of stagnation and they warn policy makers about the impact of demographic change on the foreseeable effects of monetary policy.

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Policy reform and optimal inflation rate for Japan in computable OLG economy

Cited by 4 publications

References 13 publications

Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach

Is gold a hedge against inflation? New evidence from a nonlinear ARDL approach

The Impacts of Population Aging on China’s Economy

The Aging-Inflation Puzzle: On the Interplay between Aging, Inflation and Pension Systems

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