RE: Japan's Debt

[Forstater, Mathew]

"Krugman on the Liquidity Trap: Why Inflation Won't Bring Recovery In Japan,"
Jerome Levy Economics Institute, Working Paper No. 298, March 2000
Jan. A. Kregel

Abstract

Paul Krugman has argued that Japan is in a liquidity trap and that it can
recover only if the central bank there follows a policy of "credible inflation."
This paper argues that Krugman's proposal, which is similar to what Fisher
proposed during the depression, is based on a different interpretation of the
liquidity trap from that proposed by Keynes and as a result his policy
recommendations can result in neither the elimination of the trap nor in Japan's
economic recovery.