The Sound of Economics What can Europe learn from Japanification?
Oct 16, 2024
Join Jacob Funk Kirkegaard, a Senior Fellow at Bruegel, and Takeshi Tashiro, a Non-resident Senior Fellow at the Peterson Institute, as they explore the complex lessons Europe can learn from Japan’s economic struggles. They discuss Japan's effective management of aging populations, low productivity, and high public debt. The conversation dives into labor participation trends, the importance of fiscal sustainability, and innovative financing solutions needed for a sustainable energy transition. Gain fresh perspectives on addressing Europe’s emerging economic issues!
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Japan's Debt Management
- Japan has high debt but low debt costs, which sloped downwards over time.
- Their public sector is small, and government revenue remained stable despite rising debt.
Fiscal Policy Approach
- Avoid significantly raising taxes like France did, despite facing fiscal challenges.
- Instead, consider Japan's approach: using debt strategically when costs are low.
Market Conditions and Debt
- Japan's fiscal space and market confidence contribute to low borrowing costs.
- Low domestic demand and deflationary pressures also lead to low interest rates.