1/4
Japan’s economy is trapped by its excessive corporate savings, says Martin Wolf. "Ultra-low interest rates are intended to raise private investment and reduce private savings. But the savings surplus has remained huge."
ft.com
Japan’s economy is trapped by its excessive corporate savings, says Martin Wolf. "Ultra-low interest rates are intended to raise private investment and reduce private savings. But the savings surplus has remained huge."
ft.com
2/4
The reason has to do with the drivers of investment. If the constraint on Japanese business investment were expensive capital or scarce savings, "ultra-low interest rates" would indeed spur investment.
But if the constraint is weak demand, driven mainly by...
The reason has to do with the drivers of investment. If the constraint on Japanese business investment were expensive capital or scarce savings, "ultra-low interest rates" would indeed spur investment.
But if the constraint is weak demand, driven mainly by...
3/4
weak domestic demand, then businesses won't boost investment until they see domestic demand pick up.
Ironically, "ultra-low interest rates" are part of the problem as they shift income from Japanese household savers to Japanese borrowers.
weak domestic demand, then businesses won't boost investment until they see domestic demand pick up.
Ironically, "ultra-low interest rates" are part of the problem as they shift income from Japanese household savers to Japanese borrowers.
4/4
If Tokyo really wants to boost domestic demand, it should raise interest rates, appreciate the currency, tax corporate profits, and implement other policies that benefit households at the expense of manufacturers, which is precisely why manufacturers will block them.
If Tokyo really wants to boost domestic demand, it should raise interest rates, appreciate the currency, tax corporate profits, and implement other policies that benefit households at the expense of manufacturers, which is precisely why manufacturers will block them.
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