Japan Denies Policy Influenced by Modern Monetary Theory In Any Way
Japan Denies Policy Influenced By Modern Monetary Theory In Any Way
(Bloomberg) -- Japan took the unusual step of issuing a statement to deny its policy was in any way influenced by modern monetary theory on a day when senior government officials hinted that extra public spending could be in the works.
“As a government, we don’t implement policy based on the idea that Japan is a successful case of MMT because its inflation and interest rates are not rising despite massive debt,” the statement says. “We are working to restore fiscal health,” it added.
The statement was issued in response to a lawmaker’s written request to clarify the government’s views on the theory.
Earlier in the day, Prime Minister Shinzo Abe indicated he was ready to put together an extra budget to address economic damage caused by the typhoon Hagibis over the weekend. Abe was already expected to compile an extra budget to reduce the economic impact of a sales tax increase that is expected to cause the economy to shrink in the last three months of this year.
Some economists say the size of an extra stimulus package could be as large as 5 trillion yen ($46 billion) given the damage caused by the natural disaster to buildings, roads and bridges. That scale of spending would likely require the issuing of new bonds, some of them added.
--With assistance from Emi Urabe.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson
©2019 Bloomberg L.P.