Speaker: A/Prof Yuta Takahashi
Affiliation: Hitotsubashi University
Location: Room 629 Economics Boardroom, Level 6, Colin Clark Bld #39, UQ St Lucia Campus.
Abstract
We present evidence that the rise in inflation in Japan since 2014 is a result of a hidden stagflation: the relative prices of durable consumption and ICT investment goods stopped declining, reflecting technology stagnation and exerting an inflationary pressure on the economy and; the real side of the Japanese economy simultaneously started stagnating even further. We construct a multi-good monetary model to account for these facts together and quantify the impact of the technology stagnation on the aggregate inflation rate. We develop a new sign restriction approach to construct informative lower bounds to the impact of the technology stagnation on long-run inflation without relying on the exact Euler equation and some of the balanced growth path properties. By using the lower bounds, we find that inflation would be close to 0% or even negative without the technology stagnation. Moreover, the technology stag- nation explains a sizable fraction of the observed slowdown in the real GDP and consumption growth. Our findings challenge the conventional view that Japan emerged from long-lasting deflation owing to the unconventional monetary policies. Finally, we apply our analysis to European countries and uncover the hidden stagflation there as well.
About the presenter's meeting
A/Prof Yuta Takahashi will be visiting the School of Economics on Tuesday 26th July 2022. While here, he will be using room 504A Colin Clark Building. If you would like to meet with speaker, please contact Dr Satoshi Tanaka
About Macroeconomics Seminar Series
A seminar series designed specifically for macroeconomists to connect and collaborate.