Critical Comparison of Japanese and American Fiscal Policies with Respect to Institutional Differences, 1990-2020

Dominik Pfragner

Master's thesis

Abstract:

This thesis analyzed fiscal and monetary policy of the United States and Japan between 1990 and 2020 through decomposition of macroeconomic aggregates and put them in perspective with institutional specificalities to evaluate, whether institutions matter for policymaking today. It argues that though there are visible influences of institutions on economic development, they are difficult to control through policy measures. It is good to know of their existence, however, to better estimate future policy impacts. For policymakers, it is best to lift formal regulations around institutions and let them change by themselves. Moreover, this thesis recommends to focus on sustainable fiscal and monetary policy, which has not been achieved in Japan but more so in the United States. The yet barely visible perils of unsustainable policy deserve special attention as the analysis revealed.

Abstract:

This thesis analyzed fiscal and monetary policy of the United States and Japan between 1990 and 2020 through decomposition of macroeconomic aggregates and put them in perspective with institutional specificalities to evaluate, whether institutions matter for policymaking today. It argues that though there are visible influences of institutions on economic development, they are difficult to control through policy measures. It is good to know of their existence, however, to better estimate future policy impacts. For policymakers, it is best to lift formal regulations around institutions and let them change by themselves. Moreover, this thesis recommends to focus on sustainable fiscal and monetary policy, which has not been achieved in Japan but more so in the United States. The yet barely visible perils of unsustainable policy deserve special attention as the analysis revealed.

Keywords

Fiscal Policy, Monetary Policy, Institutions, USA, Japan

Keywords

Monetary Policy, Institutions, Fiscal Policy, USA, Japan

Language used: English

Date on which the thesis was submitted / produced: 11. 8. 2022

Thesis defence

• Date of defence: 5. 9. 2022
• Supervisor: Marek Loužek
• Reader: Milan Bednář

Vysoká škola ekonomická v Praze

Master programme:
Economics and Public Policy