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The Sources Of Economic Growth: What If Countries Were Companies? - The European Business Review europeanbusinessreview.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from europeanbusinessreview.com Daily Mail and Mail on Sunday newspapers.
Japanese realized and expected inflation has been below the Bank of Japan’s two percent target for many years. We use the exogenous COVID-19 pandemic shock to examine the efficacy of monetary and fiscal policy responses for elevating inflation expectations from an arbitrage-free term structure model of nominal and real yields. We find that monetary and fiscal policy announcements during this period failed to lift inflation expectations, which instead declined notably and are projected to only slowly revert back to levels far below the announced target. Hence, our results illustrate the challenges faced in raising well-anchored low inflation expectations. ....