Krugman on the Liquidity Trap: Why Inflation Won't Bring Recovery In Japan
AbstractPaul Krugman has argued that Japan is in a liquidity trap and that it can recover only if the central bank there follows a policy of "credible inflation." This paper argues that Krugman's proposal, which is similar to what Fisher proposed during the depression, is based on a different interpretation of the liquidity trap from that proposed by Keynes and as a result his policy recommendations can result in neither the elimination of the trap nor in Japan's economic recovery.
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Bibliographic InfoPaper provided by Levy Economics Institute, The in its series Economics Working Paper Archive with number wp_298.
Date of creation: Mar 2000
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Other versions of this item:
- J. A. Kregel, 2000. "Krugman on the liquidity trap: why inflation won't bring recovery in Japan," Economia, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 1(1), pages 39-58, January-J.
- Jan A. Kregel, 2000. "Krugman on the Liquidity Trap: Why Inflation Won't Bring Recovery in Japan," Macroeconomics 0004045, EconWPA.
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- Joerg Bibow, 2004. "Fiscal Consolidation Contrasting Strategies & Lessons from International Experience," Macroeconomics 0402014, EconWPA.
- Mauro Boianovsky, 2003. "The IS-LM Model and the Liquidity Trap Concept: from Hicks to Krugman," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] a13, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Peter Spahn, 2007. "Real Interest Rates, Intertemporal Prices and Macroeconomic Stabilization A Journey Through the History of Economic Thought," Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim 292/2007, Department of Economics, University of Hohenheim, Germany.
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