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The Bank of Japan’s Quantitative Easing: An Unnatural Imbalance

On October 31, 2014, the Bank of Japan made public its policy of buying larger amounts of government debt—80 trillion yen ($734 billion) a year—so as to stimulate the economy.[1]The Nikkei 225-stock index average rose almost 5 percent that day, while the yen fell to its lowest level against the dollar since the preceding month. In effect, investors and analysts were factoring in the likely stimulatory impact on the economy and the inflationary implication of more yen relative even to the expanded output, respectively. Put another way, the lower yen suggests that any strengthening of the currency from higher economic output would be more than countered by the weakening impact of inflation. Interestingly, not even the likely boost to exports from the cheaper yen was expected by the market participants to give the stimulus the edge in pushing the currency higher rather than lower.
 
The full essay is at “The Bank of Japan’s Quantitative Easing


1. Jonathan Soble, “Japan’s Central Bank Unexpectedly Moves to Stimulate Economy,The New York Times, October 31, 2014.


 

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Does Jeb Bush’s Support for Higher Taxes Make Him more Fiscally Conservative than Paul Ryan?

Since I criticized Paul Ryan’s Roadmap budget plan yesterday as part of my column against the value-added tax, I now feel obliged to defend the proposal in one important respect. But first, some background. In a recent piece for the American Enterprise Institute, James Pethokoukis applauded former Florida Governor Jeb Bush for being willing to […]

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Are Well-Meaning but Misguided Conservatives Being Seduced by the Value-Added Tax?

Libertarians are sometimes accused of being unrealistic and impractical because we occasionally talk about unconventional ideas such as competitive currencies and privatized roads. But having a vision of a free society doesn’t mean we’re incapable of common-sense political calculations. For example, my long-run goal is to dramatically shrink the size and scope of the federal […]

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Who You Going to Believe on Infrastructure Spending: The IMF in August or the IMF in October?

The International Monetary Fund isn’t my least-favorite international bureaucracy. That special honor belongs to the Organization for Economic Cooperation and Development, largely because of its efforts to undermine tax competition and protect the interests of the political class (it also tried to have me arrested, but I don’t hold that against them). But the IMF […]

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Excessive Government Spending in Europe: Sowing the Seeds for another Fiscal Crisis

Europe is in deep trouble. That’s an oversimplification, of course, since there are a handful of nations that seem to be moving in the right direction (or at least not moving rapidly in the wrong direction). But notwithstanding those exceptions, Europe in general is suffering from economic stagnation caused by a bloated public sector. Barring […]

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Hong Kong’s Remarkable Fiscal Policy

I’ve had ample reason to praise Hong Kong’s economic policy. Most recently, it was ranked (once again) as the world’s freest economy. And I’ve shown that this makes a difference by comparing Hong Kong’s economic performance to the comparatively lackluster (or weak) performance of economies in the United States, Argentina, and France. But perhaps the […]

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