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Advances in Japanese Business and Economics

Strong Money Demand in Financing War and Peace

The Cases of Wartime and Contemporary Japan

Authors: Saito, Makoto

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  • Investigates the emergence of strong money demand in wartime Japan and its reemergence in contemporary Japan
  • Constructs an augmented fiscal/monetary theory of price level by examining strong money demand in the above two periods
  • Explains puzzling monetary and fiscal phenomena observed in contemporary Japan
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  • ISBN 978-981-16-2446-9
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About this book

This book theoretically and empirically investigates the emergence of strong money demand in wartime Japan (1937–1945), its disappearance after the end of the war (1945–1949), and the reemergence of strong money demand in contemporary Japan (from 1995 to the present) in terms of the effects on fiscal activities and the price level. An augmented fiscal/monetary theory of the price level is constructed from a close examination of the strong money demand present in these periods. Then, profoundly puzzling phenomena such as mild deflation despite monetary expansion, low long-term interest rates despite fiscal unsustainability, and weak aggregate demand despite near-zero rates of interest, all of which are actually being observed in contemporary Japan, can now be interpreted in line with the above augmented theory. In the present, strong money demand at near-zero rates endows the Japanese government with maximum fiscal flexibility. However, if it disappeared for some reason, prices would surge to the quantity theory of money level, and fiscal sustainability would have to be restored. In the future, alternative currency units issued by private banks might carry out a purge of such strong demand for the yen.


About the authors

Makoto Saito is Professor at Graduate School of Economics, Nagoya University, where he has been on the faculty since 2019. He received his B.A. from Kyoto University, and his Ph.D. from Massachusetts Institute of Technology. After he worked as economist at The Sumitomo Trust Bank, he was on the faculty at The University of British Columbia, Kyoto University, Osaka University, and Hitotsubashi University. His long-run research agenda concerns dynamics of asset pricing in the presence of heterogeneous agents in both domestic and international contexts. Immediately after the Great East Japan Earthquake happened in March, 2011, he conducted intensive research into the causes, effects, and consequences of the earthquake, including the Fukushima-Daiichi nuclear power accident. His recent research puts the Bank of Japan’s monetary policy in historical contexts, and explores policy implications. He published many papers in professional journals, including Journal of Monetary Economics, Journal of International Economics, Journal of Mathematical Economics, and Review of Income and Wealth. He received Ishikawa Prize from The Japanese Economic Association in 2007, and was given Medal with Purple Ribbon from the Emperor in 2014. For his books published in Japanese, he receives Nikkei Prize for Excellent Books in Economic Science in 2002, Economist Prize in 2008, The Zengin Foundation Award in 2010, and Ishibashi Tanzan Prize in 2012.

Table of contents (6 chapters)

Table of contents (6 chapters)
  • Introduction: Toward a Monetary and Fiscal Theory of the Price Level

    Pages 1-24

    Saito, Makoto

  • Central Banknotes and Black Markets: The Case of the Japanese Economy During and Immediately After World War II

    Pages 25-56

    Saito, Makoto

  • On Large-Scale Monetary Operations in the Japanese Occupied Territories During the Pacific War

    Pages 57-78

    Saito, Makoto

  • Public Bonds as Money Substitutes at Near-Zero Interest Rates: Disequilibrium Analysis of the Current and Future Japanese Economy

    Pages 79-119

    Saito, Makoto

  • Long-Run Mild Deflation Under Fiscal Unsustainability in Contemporary Japan

    Pages 121-159

    Saito, Makoto

Buy this book

eBook $109.00
price for Brazil
  • ISBN 978-981-16-2446-9
  • Digitally watermarked, DRM-free
  • Included format: PDF, EPUB
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Hardcover $139.99
price for Brazil
  • ISBN 978-981-16-2445-2
  • Free shipping for individuals worldwide
  • Institutional customers should get in touch with their account manager
  • Covid-19 shipping restrictions
  • Usually ready to be dispatched within 3 to 5 business days, if in stock
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Bibliographic Information

Bibliographic Information
Book Title
Strong Money Demand in Financing War and Peace
Book Subtitle
The Cases of Wartime and Contemporary Japan
Authors
Series Title
Advances in Japanese Business and Economics
Series Volume
28
Copyright
2021
Publisher
Springer Singapore
Copyright Holder
Springer Nature Singapore Pte Ltd.
eBook ISBN
978-981-16-2446-9
DOI
10.1007/978-981-16-2446-9
Hardcover ISBN
978-981-16-2445-2
Series ISSN
2197-8859
Edition Number
1
Number of Pages
XXIV, 204
Number of Illustrations
44 b/w illustrations, 8 illustrations in colour
Topics