The government of Prime Minister Shinzo Abe said it would offer some $15 billion in financing for businesses hit by the novel coronavirus and spend about $4 billion directly to prop up the economy.“As the top priority for the time being, we have to put all our effort into keeping businesses alive,” Mr. Abe said.Still, in a $5 trillion economy, the measures may not be big enough to dig the country out of a big hole. SMBC Nikko Securities economist Junichi Makino said he expected the Japanese economy to shrink at an annualized pace of 5.8% in the January-to-March period following a 7.1% contraction in the last quarter of 2019.Japan is set to offer emergency no-interest loans of about $1,900 to newly jobless people and others in trouble, and the borrowers may not have to pay the money back if they can’t find work. Businesses at risk from the virus can access financing or loan guarantees from the government QUESTIONS: 1. How would the financing plan designed to supports businesses impact the Japanese market for loanable funds and the Japanese real goods market (ceteris paribus). 2. Do you think the Japanese fiscal stimulus will ameliorate the impact from coronavirus? Why or why not?
The government of Prime Minister Shinzo Abe said it would offer some $15 billion in financing for businesses hit by the novel coronavirus and spend about $4 billion directly to prop up the economy.
“As the top priority for the time being, we have to put all our effort into keeping businesses alive,” Mr. Abe said.
Still, in a $5 trillion economy, the measures may not be big enough to dig the country out of a big hole. SMBC Nikko Securities economist Junichi Makino said he expected the Japanese economy to shrink at an annualized pace of 5.8% in the January-to-March period following a 7.1% contraction in the last quarter of 2019.
Japan is set to offer emergency no-interest loans of about $1,900 to newly jobless people and others in trouble, and the borrowers may not have to pay the money back if they can’t find work. Businesses at risk from the virus can access financing or loan guarantees from the government
QUESTIONS:
1. How would the financing plan designed to supports businesses impact the Japanese market for loanable funds and the Japanese real goods market (ceteris paribus).
2. Do you think the Japanese fiscal stimulus will ameliorate the impact from coronavirus? Why or why not?
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