In addition, since the decline in the potential growth rate is likely to also lower expected permanent incomes, it will give rise to a negative income effect, which likely will exert downward pressure on economic activity.
An increase in the potential growth rate gives rise to downward pressure on prices from the supply side, whereas it may give rise to upward pressure on prices from the demand side via improvement in expectations of future income.
Failing that, the expansion might at least reverse declines in the growth rate of potential, so the damage from the Great Recession does not continue to grow.
Thus, I believe monetary policy to overcome deflation and supply-side reforms to raise the growth potential must be pursued in tandem, or"at the same time," to bring Japan's economy back on track toward sustained growth..
And third, in order to put the brakes on the decline in the potential growth rate and productivity growth, efforts at innovation are more important than ever.
高齢化の進展や人口の減少は、潜在成長率の低下、財政収支の悪化、住宅価格の下落をもたらす要因である。
The implications of population aging and decline are also very profound, as they contribute to a decline in growth potential, a deterioration in the fiscal balance, and a fall in housing prices.
That said, the conventional view takes the supply side, such as the potential growth rate and the natural rate of unemployment, as a given in the conduct of monetary policy.
The world economy continues steady expansion, occurring mainly in the United States and China, and it is thought very likely that it will continue expanding at a rate roughly equivalent to the potential growth rate.
Approach to the Aging Society Research is required on the macroeconomic impacts of the population decrease and the aging, especially the impacts on the potential growth rate, pension system and external payments.
This will encourage firms' positive initiatives to make fixed investment and implement structural reforms, which will in turn bring a gradual rise in the potential growth rate of Japan's economy.
These two steps will encourage firms' positive initiatives to make fixed investment and implement structural reform. That will in turn bring a gradual rise in the potential growth rate of Japan's economy.
Second, if corporate profits decrease due to the yen's appreciation, or if the economy's potential growth rate and firms' growth expectations for the domestic market wind up being lower than expected, firms might become more cautious about wage raises, which could in turn restrain private consumption.
Survey results suggest that long-term price expectations have been relatively stable in a range between 0 and 2 percent since the latter half of the 1990s and that fluctuations in expectations seem to correlate with the potential growth rate.
We agree on the importance of directing macroeconomic and structural policies in all our countries at achieving this objective, with emphasis on taking full advantage of the investment opportunities created by new technologies to raise potential growth rates.
If a portion of China's foreign exchange reserves were to be used to improve infrastructure, education, medical services and pension funds in rural areas, it would not only reduce the gap between rural and urban areas but also boost the potential growth rate of the entire country through the improvement of human and social capital.
On the U.S. economy, members concurred that it continued to expand steadily at a pace around its potential growth rate, with household spending--private consumption and housing investment--increasing and the employment situation improving.
On the U.S. economy, many members expressed the view that, although there were signs of deceleration in housing sales, it continued to expand steadily, led mainly by household spending and business fixed investment, and was likely to keep expanding at a pace around its potential growth rate.
Economic developments among Japan's main trading partners indicate that the U.S. economy continues to expand steadily, at a pace around its potential growth rate, led mainly by business fixed investment and household spending, although there are signs of a slowdown in some parts of the economy, specifically in the housing market.
Considerations regarding the economic outlook I consider that Japan's economy is likely to continue growing generally at about the same level as the potential growth rate throughout the projection period that covers through fiscal 2018. In my view, however, risks are skewed to the downside, especially at the end of the projection period.
If such efforts toward improvement in labor productivity in nonmanufacturing feed back into manufacturing and a virtuous cycle in the overall economy is generated, the growth potential will be raised, thereby enhancing the probability of achieving the price stability target of 2 percent in the medium to long term.
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