Inflation, Monetary and Fiscal Policy, and Japan

This is a paper for the 2024 Bank of Japan - Institute for Money and Economic Studies conference in Japan. Japan had nearly perfect monetary policy outcomes from 1994-2021. I compare Japan to US inflation 2021-2023 via fiscal theory. Japan had less deficit, more debt (that helps) and arguably more credible repayment (on the margin). Japan offers even larger and more definitive versions of the grand experiments that distinguish theory. A stable quiet zlb means that spirals are not real, so the major reason for a 2% rather than 0% inflation vanishes. Japan and the US have a spending problem, not a debt problem. With a similar situation I offer some possibilities that Japan might actually be more sustainable than the US. Read the paper>