Firms slow to adjust investment targets for inflation – BoJ study
Discount rates are sticky and do not rise with expected increases in price levels, research finds
Research by the Bank of Japan finds that companies are slow to adjust their investment profit targets for inflation, and that this has a significant impact on the domestic economy.
The study by the BoJ’s Institute for Monetary and Economic Studies, published on October 31, finds that Japanese firms’ discount rates are sticky and do not immediately rise in line with expected increases in inflation. The researchers – Masao Fukui, Niels Joachim Gormsen and Kilian Huber – say this occurs even when
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