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CEP discussion paper
The Great Stagnation: What Can Policymakers Do?
Sushil B. Wadhwani
April 2013
Paper No' CEPDP1198:
Full Paper (pdf)

Tags: annual peston lecture; tax incentives; inflation; stock market; monetary policy; japan; uk

Although the economic recovery in the UK has been disappointing, it is inappropriate to either assert that Japan’s two lost decades illustrate the ineffectiveness of stimulative monetary policy or that the UK is predestined to perform as badly as Japan. Recall that the UK has, so far, avoided the deflation that held back the Japanese economy. One could, instead, argue that Japan illustrates the pitfalls associated with insufficiently aggressive monetary policy. Hence, it is appropriate to consider how we might make monetary policy more effective in the UK.