The Japanese economy faces a number of difficult economic problems to solve; declining working-age population, long-term deflation, monetary policy with zero-interest rate floor, and a large budget deficit. In this paper, we propose a few macro-economic measures to raise taxes without hurting the...

The traditional interest rate policy has lost its potency due to the zero-lower bound of nominal interest rates and the gradual accelerating deflation in Japan. Without stopping deflation, the Japanese government may face a rapid erosion of credit worthiness due to an uncontrolled budget...