scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 1,314
If you take Krugmans book and any and all other articles he has written on the crises in Japan anyone can tell that he thinks Japan needs inflation According to him Japan needs to print sufficient money to ensure many years of rising prices ie rising by more than 3 Given that nominal interest rates cannot fall below zero inflation is the only way to generate the negative real interest rates that are needed to reverse the liquidity trap that Japan finds itself in Japans problem excessive savings is so ingrained that even interest rates of a bit less than 5 are insufficient to get firms to make use of all Japanese unspent incomes The only way to make them reduce their savings rate is to make their money depreciate ie to eventually become worthless if it is not spent They are not spending due to the fact that the prices keep falling and the Japanese will hold out until the first sign of price increase I think that at this point it is safe to say that the more an economy produces at a cost lower than it sells for GDP in general will rise Firms in Japan are abstaining from this production because the labor prices are to high and they dont buy machinery that will increase production because the prices are still dropping If a firms economic advisor is allowed to step in and make predictions about the economy and when to buy the firm will undoubtedly wait to the last moment where they think they can get any and all materials necessary for production the cheapest With this in mind Krugman would argue that there remains two problems with a policy of printing money one that he noted and one that I would add and that does go beyond the state which Krugman confines himself to Krugman noted that the Japanese Central Bank would have a credibility problem if
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA