Structural reforms in the liquidity trap need not be deflationary. This paper develops a simple framework to study the role that key characteristics of Japan's labor and product markets--labor-market duality and weak corporate governance--play in generating unfavorable wage-price dynamics. The model allows a discussion of whether and in what form structural reforms may contribute to Japan's short-run goal of reflating the economy. It finds that boosting inflation with structural reforms implies an unusual trade-off with employment, that is an inverted Phillips curve. Simultaneous implementation of labor-market and product-market reforms is most effective in terms of reflating the economy.--Abstract
Notes
"February 2016."
"Asia and Pacific Department."
Bibliography
Includes bibliographical references (pages 23-25)
Notes
Online resource; title from pdf title page (IMF.org Web site, viewed March 31, 2016)
