secular stagnation. The “secular” happens because aggregate demand is always below aggregate supply, due to a too-high real interest rate. When the actual real interest remains higher than the natural real rate of interest, stagnation cannot be overcome easily. Secular stagnation can be defined as the natural real rate of interest becoming negative, while the actual rate stays above the natural rate. See Eggertsson and Mehrotra (2014) for formal modeling. Nominal zero bound: i = 0. The third characteristic is that the policy rate, i, is lowered to and stuck at (near

not until the 1960s that Japan was able to build up its road network, and the main form of transportation remained the railways. The country lacks its own energy resources and is the world’s largest importer of coal and liquefied natural gas, and the second-argest importer l of oil. Japan also has little iron ore and insufficient land on which to produce enough food for its population. Japan imports many goods, including raw materials for domestic production. Without natural resources, Japan was induced to export what it did have access to – silk and tea – and

environmental Kuznets curve (EKC), which was coined by Grossman and Krueger (1995) in their work on economic development and pollution rates. The EKC theory describes the progressive relationship between economic development and environmental pollution. Essential to this approach is the idea that the environmental impact of a country is determined based upon what level of income it has attained (Grossman and Krueger 1995). The theory states that countries undergo three general stages of the development process in relation to their environmental repercussions. The base level

arrangement, India agreed to reduce imports, but still non- esident r Indian (NRI) deposit outflows accelerated in the second quarter of 1991, reflecting a crisis of confidence, as mentioned above. A swathe of measures was instituted in 1991 to reform the economy, in response both to industrial stagnation beginning in 1988, and to the balance- f- ayments crisis. o p India implemented this series of reforms under the New Economic Policy to further liberalize the economy to foreign trade. The New Economic Policy focused on devaluing the rupee, increasing interest rates

the unskilled labor sector is: Yn 5 wn # L n t t (6.6) where Yn and L n are output and unskilled labor, and wn is the marginal t t productivity of unskilled labor. Individuals live two periods in overlapping generations, with utility functions as follows: u 5 a log c 1 (1 2 a) log b (6.7) where c indicates consumption in the second period, b is bequest, and 0 , a , 1. Individuals vary in bequest, and not in abilities or preferences. Capital is assumed to be mobile, and the world interest rate r . 0 and constant. Borrowers can evade repayment by moving, but

; Government Finance Statistics, International Monetary Fund. How should revenues from natural resources be shared in Indonesia? 203 centralization. The revenue stakes are high, and countries that can tap natural resources for supporting central government expenditures can avoid imposing high general tax rates on the voting public. Central government officials, and parliaments, might be loath to give up this natural advantage. There are issues of political control over these resources that might discourage decentralization of governance. Finally, there are questions of

1997 and in August 1997, in the face of continued pressure on the currency, the rupiah was allowed to float. This policy was backed by a significant tightening of liquidity conditions and a rise in interest rates and an announcement that the budget surplus would be preserved by postponing major infrastructureprojects, cutting low priority development programmes, and extending the coverage of the luxury sales tax. At the same time, import tariffs on over 150 items, mainly raw materials and other intermediate goods, were reduced effective mid-September 1997, while the

that year. In order to restore Korea’s international credibility it launched economic stabilisation policies, in particular a high interest rate policy, and mounted a wide-ranging drive for structural reform of the financial, corporate, labour and public sectors, which had a positive effect on the recovery of confidence. Such increased confidence, bolstered by a huge current account surplus, boosted capital inflows and stabilised the exchange rate. With the recovery of stability in the foreign exchange market, the stance of monetary policy then turned to achieve a