The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI), the Asian Development
Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any
consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Ultra-Low Interest Rates and Growth

in Emerging East Asia from a
Hayekian Perspective by Prof.
Gunther Schnabl
Naoyuki Yoshino
Dean Asian Development Bank Institute
Professor Emeritus, Keio University, Japan
nyoshino@adbi.org 1
2
3
4
Empirical Analysis of AS-AD equations of Japan

5
6
7
8
9
10
11
12
Reasons for Vertical IS curve

13
14
 Population Aging of Japan
Current Forecast Peak of the Population
10 of Thousands Figures (2012) 2004, 127.8 million
14,000 70.0
Age 65 and
over
12,000 60.0
Age 1564
10,000 50.0
Age 14 and
8,000 40.0 less

Aged
6,000 30.0 Population
Ratio
Working
4,000 20.0 Population
Ratio (15-64)
Total Fertality
2,000 10.0 Rate (TFR)

0 0.0 SourceMinistry of Internal

Affairs and Communication
FY 15
 Spillover effects Return to investors
1961-
1956-60 1966-70 1971-75 1976-80 1981-85
65
Direct Effect (Kg) 0.696 0.737 0.638 0.508 0.359 0.275

Indirect Effect (Kp) 0.453 0.553 0.488 0.418 0.304 0.226

Indirect Effect (L) 1.071 0.907 0.740 0.580 0.407 0.317

1986-90 1991-95 1996-00 2001-05 2006-10

0.215 43.8
0.181 39.60.135
38.5 39.3
0.114 39.60.108
0.195 0.162 0.122 0.1 0.1
0.193 0.155 0.105 0.09 0.085
16
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Abenomics. Journal of Japanese Political Economy. Routledge: Taylor and Francis, DOI:
10.1080/2329194X.2014.998591
Yoshino, N., T. Mizoguchi and Taghizadeh-Hesary, F. (2015) Optimal Fiscal Policy Rule for Achieving Fiscal
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