16 Concluding Remarks
- Tamim Bayoumi, Guy Meredith, and Bijan Aghevli
- Published Date:
- June 1998
This seminar generated lively debate on a wide range of policy issues and allowed a productive interchange of views between IMF staff and knowledgeable outsiders. The following is a brief assessment of what was learned in each session.
The analysis of the underlying value of the yen was well received. The emphasis placed on intertemporal factors was particularly noted, especially by those with knowledge of the tools being used. It was generally agreed that the approach provided a useful way of looking at potential currency misalignments, although a wide range of uncertainty was inevitable in such a complex calculation.
On the external sector, there was near unanimity that concerns about Japan’s current account surplus had been misplaced, and that the best approach to looking at the current account over the medium term was to consider likely trends in saving and investment. The staff’s analysis of outward foreign direct investment from Japan provoked considerable discussion, and several directions for further work were suggested.
On monetary policy, there was a lively debate on monetary policy formulation over the past decade and on the merits of the monetary conditions index (MCI) used by the staff. The chairman’s overall conclusion was that the index was a useful tool for analyzing monetary developments, but one had to be careful in interpreting the movements in the MCI for policy prescription purposes. Looking to the future, most participants felt that greater independence for the Bank of Japan would need to be complemented by a more formal framework to guide monetary policy.
On fiscal policy, a wide range of opinions was expressed as to whether the fiscal expansion of the early 1990s was useful in supporting the economy. Most participants agreed that fiscal consolidation was currently necessary. There was general agreement about the benefits of further fiscal transparency, the subject of the research paper by the staff.