Policy reform and optimal inflation rate for Japan in computable OLG economy

Manabu Shimasawa*, Akira Sadahiro

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)


    We build a computable OLG model with monetary growth to calculate the optimal level of inflation rate for Japan, and to study policy reforms make any quantitative impacts on it. Four main results were obtained: (i) the optimal inflation rate for Japan is calculated around 1.0%; (ii) the calculated underlying inflation rate is about 9% under the present Japanese economic and fiscal situation; (iii) to prevent high inflation, fiscal reconstruction needs to be implemented; and (iv) if fundamental fiscal reform is conducted, the optimal inflation rate might be achieved. These results are very robust to calibration.

    Original languageEnglish
    Pages (from-to)379-384
    Number of pages6
    JournalEconomic Modelling
    Issue number2
    Publication statusPublished - 2009 Mar


    • Calibration
    • Fiscal reform
    • Money-in-the-utility
    • Optimal inflation rate
    • Overlapping generations

    ASJC Scopus subject areas

    • Economics and Econometrics


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