Japan has been mired in a recession/depression for a couple of decades now, and has experienced
very low inflation, and in some cases deflation. The Japanese Prime Minister (Abe), Chairman of
the Bank of Japan (Kuroda), and others have desperately tried to induce inflation in the
economy, thus far without success. Kuroda has been using what some call the “Peter Pan”
strategy, where “Dreams do come true, if only we wish hard enough.” With that backdrop, what
are “animal spirits” and how does moderate inflation relate to the Japanese macroeconomy?
Solution
Answer : \" Animal Spirits\" means that emotion of the human being related to particular return.
It means that individual are losing confidence at particular time duration. They are not interesting
in savings as there is Zero or negative interest rate which shows that no more interest has been
gained by the individual. Emotional feeling of japanse individual is that no saving or investment
are useful for them.
As we know from the last few decades the country has suffered deflation after the effect of real
estate. In 2016 the Chairperson has implemented year of near zero and negative interest rate. Abe
( Prime minister) hoped that these monetary policy work in the economy and all problems are
sort out. But this is not possible so the solution to all problems is moderate inflation. Moderate
inflation means that rise in the price but not too fast nor too slow..
Japan has been mired in a recessiondepression for a couple of decad.pdf
1. Japan has been mired in a recession/depression for a couple of decades now, and has experienced
very low inflation, and in some cases deflation. The Japanese Prime Minister (Abe), Chairman of
the Bank of Japan (Kuroda), and others have desperately tried to induce inflation in the
economy, thus far without success. Kuroda has been using what some call the “Peter Pan”
strategy, where “Dreams do come true, if only we wish hard enough.” With that backdrop, what
are “animal spirits” and how does moderate inflation relate to the Japanese macroeconomy?
Solution
Answer : " Animal Spirits" means that emotion of the human being related to particular return.
It means that individual are losing confidence at particular time duration. They are not interesting
in savings as there is Zero or negative interest rate which shows that no more interest has been
gained by the individual. Emotional feeling of japanse individual is that no saving or investment
are useful for them.
As we know from the last few decades the country has suffered deflation after the effect of real
estate. In 2016 the Chairperson has implemented year of near zero and negative interest rate. Abe
( Prime minister) hoped that these monetary policy work in the economy and all problems are
sort out. But this is not possible so the solution to all problems is moderate inflation. Moderate
inflation means that rise in the price but not too fast nor too slow.
