Economic Policy Group co-organizers, John Cochrane and Valerie Ramey, hosted a talk on “What About Japan?”
Presenter: Hanno Lustig, the Mizuho Financial Group Professor of Finance at the Stanford Graduate School of Business and Senior Fellow at the Stanford Institute for Economic Policy Research
Moderator: Valerie Ramey, the Thomas Sowell Senior Fellow at the Hoover Institution
SUMMARY
Over the last decade, the Japanese public sector has primarily borrowed at floating rates while investing in longer-duration risky assets, earning an annual return exceeding 6% of GDP above its funding costs. We quantify the impact of Japan's low-rate policies on its government and households. The government duration mismatch expands fiscal space when real rates fall, helping the government fulfill promises to older households. A typical younger Japanese household does not have enough duration in its portfolio to continue to finance its spending plan and will be worse off. Low-rate policies tend to tax younger and less financially sophisticated households.
To read the slides, click here.
To read the paper, click here.
WATCH THE SEMINAR
Topic: What About Japan?
Start Time: November 12, 2025, 12:15 PM PT
PARTICIPANTS
Hanno Lustig, Valerie Ramey, John Cochrane, John Taylor, Frederich Asschenfeldt, Valentin Bolotnyy, Ruxandra Boul, Oliver Bush, Pedro Carvalho, Ryan Cummings, Christopher Erceg, David Fedor, Tomer Fidelman, Robert Fluegge, Eyck Freymann, Brandon Garcia, Patrick Gaynor, Nick Gebbia, Lance Gilliland, Siddarth Gundapaneni, George Hall, Eric Hanushek, Thomas Hoenig, Chris Karbownik, Evan Koenig, Christian Kontz, Don Koch, Jeff Lacker, David Laidler, Lilia Maliar, Robert McCauley, Ross McKerracher, Axel Merk, Alvin Rabushka, Joshua Rauh, Flavio Rovida, Paola Sapienza, JR Scott, Pierre Siklos, Isaac Sorkin, Tomas Tapak, Jack Tatom, Araha Uday, Victor Valcarcel, Mike Wu, Alexander Zentefis
