The case of Italy

Abstract

With the COVID-19 crisis, the Japanese economy has been facing a depression which is the equal to or worse than that during the global financial crisis (GFC). The impact has been more severe on the services sectors, compared with industrial production while the impact of the COVID-19 crisis on SMEs is more severe than on large firms. The Japanese government has undertaken active fiscal measures in response to COVID-19 under the Emergency Economic Measures to Cope with COVID-19 scheme since April 2020. Due to the third surge of COVID-19 since November 2020, it is likely to take time for the positive effects of these measures on the Japanese economy to become apparent. On the other hand, the increased fiscal deficits and the accumulating outstanding Japanese Government Bonds (JGBs) might have adverse effects on JGB markets in the future, although the Bank of Japan (BOJ) has been conducting a kind of accommodating monetary policy against the accumulation of government bonds in order to keep the long-term interest rate at zero. The BOJ has been conducting responses to COVID-19 to enhance monetary easing through measures to facilitate corporate financing including the introduction of the new operations. At the same time, it has been making both ample provision of yen funds available by conducting active purchases of JGBs and ample provision of US dollar liquidity through coordinated central bank action. © 2022 selection and editorial matter, Bernadette Andreosso-O’Callaghan, Woosik Moon and Wook Sohn;individual chapters, the contributors.