Long-term low interest rates and economic stagnation – a comparative study of Japan and the Eurozone
DOI:
https://doi.org/10.54097/3bcn0c38Keywords:
Japan; Eurozone; low interest rate policy; Quantitative easing; Long-term stagnation.Abstract
This paper takes Japan's "lost 20 years" and the low interest rate policy after the eurozone financial crisis as the research object, and compares the similarities and differences between the two in the background, economic performance and policy effect of monetary policy. Through analysis, this paper finds that Japan's long-term low interest rates are mainly due to structural stagnation after the bursting of asset bubbles, deflation expectations, and population aging. Low interest rates in the euro area are mainly affected by the impact of the financial crisis and sovereign debt crisis, as well as institutional constraints. Research shows that although low interest rate policies help stabilize the economy and financial markets in the short term, they have a limited role in driving economic growth and inflation under long-term stagnation or institutional constraints, and may also reduce bank profit margins and exacerbate financial market differentiation. Through the comparison between Japan and the euro area, this paper reveals the limitations of monetary policy in different economic environments, and proposes that fiscal stimulus, structural reform and population policy should be combined to improve policy transmission efficiency and economic recovery ability.
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