ARE INTEREST RATES A CAUSE OR A RESULT IN JAPAN?

Year 2024, Volume: 22 Issue: 4, 132 - 147

İbrahim Külünk

https://doi.org/10.11611/yead.1575595

Abstract

This study attempts to explain the interest rates in the Japanese economy during the period from 1990 to 2023 using variables such as growth, inflation, and public debt. According to the analysis conducted with the ARDL test, which is recommended for non-stationary series, a 1% increase in income in the long term leads to -19.047% decrease in interest rates. A 1% change in inflation explains -29.518% change in interest rates. Specifically, a 1% increase in inflation reduces interest rates by 29.518%. It is important to note that inflation data for Japan often reflects negative values or values close to zero. In the short term, changes in GDP and public debt ratios have a reducing effect on interest rates, while changes in inflation have a positive effect. Interest rates are influenced by their lagged values and variables such as public debt and inflation.

Keywords

Interest, Japan, GDP, Inflation, Public debt

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