Structural reforms that increase competition in product and labor markets may have large effects on the long-run level of output. We find that, in a medium scale DSGE model, a 10 percent reduction in product and labor markups increases output by nearly 7 percent after 5 years. The short-run...

While the asset price collapse of the late 80s in Japan might explain the disinflationary pressures that followed, it is hard to attribute the persistent deflation that the country has faced since the mid 90s to that initial shock. We argue that a failure to account for demographic trends when...