Japan – a trailblazer in economic policy change?

Against the backdrop of moderate growth momentum and a monetary policy that is gradually approaching its limits, Japan has initiated a fiscal policy reversal. It has postponed the consumption tax increase planned for 2017 and launched a package of fiscal policy measures. Even if this package is significantly less ambitious than it seems at first sight, it does convey an important message: monetary policy alone will not do the trick. In order to counteract the weakness in aggregate demand, fiscal policy will have to take on a more active role. That will allow it to become a useful addition, although not a substitute for longer-term structural reforms.

Japan – a trailblazer in economic policy change?(PDF, 87 KB, non-accessible)