Uncertainty and Japan’s Economy: Measurement, impact, and responses

Table of Contents

Frequent uncertainty shocks.
What impact do they have on the economy?

How does uncertainty affect economic activity? From the macroeconomy to the uncertainties faced by firms and individuals, this book clarifies the mechanisms of uncertainty shocks based on original data analysis and the latest Japanese and international research.

In Japan, a minority ruling cabinet has been formed for the first time in 30 years, and the second Trump administration has taken office in the United States. With Russia's prolonged invasion of Ukraine and escalating conflicts in the Middle East, what is going to happen to the world? Japan is also facing a number of issues with an uncertain future, including a low fertility rate, aging and declining population, intensifying natural disasters, government debt, interest rates, prices, and exchange rates. Both the world and Japan are grappling with serious uncertainty.

How does rising uncertainty affect economic fluctuations, corporate activities, and people’s behavior? How can uncertainty be measured? What policy responses to uncertainty are necessary?

After the global financial crisis and the COVID-19 crisis, methods of quantitatively measuring uncertainty have advanced. The mechanisms by which increasing uncertainty affect corporate behavior, such as investment and employment, household consumption and savings, and the macroeconomy, have been clarified.

This book introduces domestic and international research on such uncertainty, and based on the author's own data analysis, clarifies the impact of uncertainty on the Japanese economy from multiple perspectives. Amid the growing sense of uncertainty, the book provides some insights into what the future holds.

Introduction: Uncertainty and the Economy
Chapter 1: Economic Analysis of Uncertainty
Chapter 2: Uncertainty in Macroeconomic Forecasting
Chapter 3: Policy Uncertainty
Chapter 4: Uncertainties Faced by Businesses
Chapter 5: Uncertainty and Corporate Behavior
Chapter 6: Uncertainty in Household Finances, Consumption and Savings
Chapter 7: Uncertainty in the Labor Market
Chapter 8: Uncertainty in the Global Economy
Final Chapter: Responding to Uncertainty
Conclusion