Wage-Price Dynamics and Structural Reforms in Japan

Wage-Price Dynamics and Structural Reforms in Japan
Author :
Publisher : International Monetary Fund
Total Pages : 26
Release :
ISBN-10 : 9781498316637
ISBN-13 : 1498316638
Rating : 4/5 (638 Downloads)

Book Synopsis Wage-Price Dynamics and Structural Reforms in Japan by : Davide Porcellacchia

Download or read book Wage-Price Dynamics and Structural Reforms in Japan written by Davide Porcellacchia and published by International Monetary Fund. This book was released on 2016-02-10 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Structural reforms in the liquidity trap need not be deflationary. This paper develops a simple framework to study the role that key characteristics of Japan’s labor and product markets—labor-market duality and weak corporate governance—play in generating unfavorable wage-price dynamics. The model allows a discussion of whether and in what form structural reforms may contribute to Japan’s short-run goal of reflating the economy. It finds that boosting inflation with structural reforms implies an unusual trade-off with employment, that is an inverted Phillips curve. Simultaneous implementation of labor-market and product-market reforms is most effective in terms of reflating the economy.


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