IDEAS home Printed from https://ideas.repec.org/a/taf/rsocec/v78y2020i2p256-279.html
   My bibliography  Save this article

Constraints on policymaking in high sovereign debt countries: case studies of Italy and Japan

Author

Listed:
  • Larry Liu

Abstract

While sovereign debt has become a major constraint in the policymaking of most developed countries, this article asks why the choices in fiscal and monetary policy were not uniform among the highest sovereign debt countries: Italy and Japan. While Japan has been fairly unconstrained in economic policymaking over the last 25 years since the onset of the ‘Lost Decades,’ Italy has been very strongly constrained even as debt levels are higher in the former than in the latter case. It is argued that Italy faced two important constraints to policymaking, which Japan does not face: (1) the higher exposure to foreign debt holding, which has made Italy more vulnerable to fluctuations in the interest rate, thus making the government more cautious about taking certain fiscal decisions; (2) the common currency and fiscal treaties to limit deficit and debt accumulation, which form a legal barrier to fiscal and monetary expansionism.

Suggested Citation

  • Larry Liu, 2020. "Constraints on policymaking in high sovereign debt countries: case studies of Italy and Japan," Review of Social Economy, Taylor & Francis Journals, vol. 78(2), pages 256-279, April.
    • Handle: RePEc:taf:rsocec:v:78:y:2020:i:2:p:256-279
    DOI: 10.1080/00346764.2019.1602283
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00346764.2019.1602283
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00346764.2019.1602283?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rsocec:v:78:y:2020:i:2:p:256-279. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RRSE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.