A0684
Title: Dark matter of Japanese government bonds
Authors: Toshitaka Sekine - Hitotsubashi University (Japan) [presenting]
Abstract: Why has the long-term Japanese Government Bonds (JGB) yield remained so low despite the extremely high debt outstanding? Is there dark matter that the JGB yield has gravitated to? An attempt was made to quantify the following two effects using the Demand System Approach based on our age-decomposition of net financial positions of the household sector. One is the effect of unconventional monetary policy by the Bank of Japan (BoJ). As BoJ has purchased JGBs so much, there is less supply of JGBs in the market, and the average maturity of JGBs has become shorter. The other is the effect of household savings. Against the risks of health and longevity, elderly families have, in effect, increased their possession of JGBs through financial intermediaries, as JGBs are special assets in terms of liquidity and safety.
