Amid these arguments referring to the possibility of a monetary easing, one member pointed out that households were very upset about the current low level of interest rates, and they were not at all convinced of the effects on economic activity of keeping the uncollateralized overnight call rate at 0.25 percent.
The effective burden of debt you already have will become heavier and, even for future borrowings, somewhat more than nominal interest rates suggest. Therefore, firms and households will become cautious about borrowing money.
This column uses Scandinavia as an example to demonstrate how tax evasion varies with wealth: the top 0.01% richest households in Scandinavia evade about 25% of the taxes they owe by concealing assets and investment income abroad.
Notwithstanding this noteworthy progress, critical challenges remain: Strains persist in many financial markets across the globe, financial institutions face significant additional losses, and many businesses and households continue to experience considerable difficulty gaining access to credit.
Namely, households have increased the present level of spending compared with one year earlier, but plan to reduce the spending level one year from now. Moreover, households tend to regard the rise in living expenses as the main reason for the increase in the current spending level when the present spending DI grows.
To analyze in detail the reasons, we compare the selection criteria for savings of Japan's households with the United States based on survey data. The survey result indicates that Japan's households attach importance to"profitability" of financial assets only half as much as those in the United States, while they put more importance on its"safety" and"liquidity.
But the recovery of this sector so severely damaged in the crisis, is also being driven by two key factors. The first is that the recovery in the US economy has meant households have been able to benefit from very low interest rates: the ease of access to credit has bolstered their purchasing power and enabled them to replace their vehicles.
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