Net national savings and the Japanese long-term interest rate
AbstractThis article discusses why the interest rate on Japanese government bonds is so low in comparison with other industrialized countries with a better credit rating, after correcting for inflation differences. We find that the net savings surplus has kept the long-term interest rate low. Japanese interest rate movements are much better explained by the current account balance in comparison with other industrialized countries. For most industrialized countries the results are statistically insignificant. For a country integrated in international financial markets, the savings-investment balance should theoretically not have a significant impact on domestic long-term interest rate formation. Institutional factors have contributed to this higher level of significance for Japan in comparison with other countries. Monetary policy and institutionalized purchases of government bonds by semi-government agencies have kept demand for bonds high and the interest rate low.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Financial Economics.
Volume (Year): 21 (2011)
Issue (Month): 23 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAFE20
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.