Japanese Finance Minister Taro Aso on Thursday said using government spending as...
TOKYO - Japanese Finance Minister Taro Aso on Thursday said using government spending as a primary policy tool to boost employment and spur inflation, an idea backed by some U.S. academics, would backfire on the world’s third-biggest economy given its huge debt pile.
Bank of Japan Governor Haruhiko Kuroda echoed Aso’s view in parliament, saying that the idea was unacceptable because it does not take into account the dangers of running a huge fiscal deficit. Taxes may not be needed to support all spending since the government can create more money and inflation is the main restraint on government spending, according to the theory.
“It’s an extreme theory that is hard to accept because it does not take into account fiscal deficit and outstanding debt,” Kuroda said.
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