A weaker currency will make Japan stronger
Reviewed By Hitoshi URABE
"A weaker currency will make Japan stronger"
(by Kumiharu Shigehara ) Financial Times
The writer, as footnoted in the article, is former deputy secretary-general and chief economist of the OECD, who served as Head of Economics Department in the organization before that, and actually a veteran of Bank of Japan.
The title of the article is somewhat short of covering the significance of this writing, as Mr Shigehara is proposing an extensive list of policy suggestions for Japan to recover. There are ten suggestions clearly itemized and numbered.
The list starts out by suggesting for the balance of bank reserves to be targeted in accordance with GDP growth, and in line with targeted inflation to which he refers later in the list. Then, by placing the viewpoint on the importance of trade for Japan, a number of recommendations are listed. It suggests the target range of the yen exchange rate to be announced, and at the same time it should be made clear that bank reserves are adjusted to compensate for fluctuations in the bank reserves caused when interventions are executed.
In order to avoid tensions from abroad in placing such exchange rate policy, and to enhance revenue, special tax is suggested to be levied on those industries that benefit through windfall incomes caused by the realization of the aimed exchange rate, from which the fund would be utilized to assist those workers losing jobs through corporate restructurings. As the last item, the list does not forget to emphasize the importance of trade liberalization in general, where it insists for Japan to play a large role.
As the writer admits, some items listed are difficult to implement, and there could very well be opposing views on some of them. But this concise and comprehensive list of suggestions could act as a good springboard for discussions to be based upon.