APENDICES 1. Additional plots and tables; 2. Business Cycle Chronologies; 3. IMF Article IV Consultations; 4. OECD Economic Surveys; 5. G20, G7 Summit Issues; 6. Compendium of Key Dates and Events; 7. Forecasts: Definitions and Sources 1 APPENDIX – ADDITIONAL PLOTS 2 Observed real GDP Growth Rates: Japan, U.S., and Germany Since 1960 (Quarterly) Real GDP Growth 20% 15% 10% 5% 0% -5% -10% -15% 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Germany Japan United States Annualized real GDP growth rates from FRED and supplemented with IMF IFS data. 3 Observed Inflation Rates: Japan, U.S., and Germany Since 1960 (Quarterly) Inflation rates 24% 20% 16% 12% 8% 4% 0% -4% 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Germany Japan United States Annualized CPI inflation rates. Sources same as previous figure. 4 Central Bank Policy Rates 20% 16% 12% 8% 4% 0% -4% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Call rate - Japan Fedfunds - USA MRO - Eurozone In percent. Data from BIS. 5 Financial and Trade Globalization Financial Globalization 90 80 70 60 50 40 30 20 10 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 JPN USA DEU Trade Globalization 70 60 50 40 30 20 10 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 JPN USA DEU Data from KOF, see main text for link. 6 Methodology explained in main bodyof Methodology explainedinmain GapEstimates Median Output -8% -6% -4% -2% 0% 2% 4% Median of Outout Gap estimates Gap Outout of Median 1981 1983 1985 1987 1989 1991 1993 JPN 1995 thetext.Dataarequarte 1997 1999 USA 2001 2003 EU 2005 R 2007 rly. 2009 2011 2013 2015 2017 2019 7 0% 1% 2% 3% 4% 5% 6% See previousgraphfordetails. Standard DeviationofO 1981 1983 1985 1987 1989 utput GapEstimates 1991 1993 JPN 1995 1997 1999 USA 2001 2003 Std. Dev. of Output Gap estimate Gap Output of Dev. Std. EUR 2005 2007 2009 2011 2013 2015 2017 2019 s 8 Inflation Expectations: Japan 8% 6% 4% 2% 0% -2% -4% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 WEO OECD Cabinet Office ESP Tankan ZEW Bank of Japan survey Economist Consensus MPC - All MPC - Majority CPI INFLATION Light colored shading, see Table 1. Dark colored shading are recession periods (Japan Cabinet Office estimates). 9 Inflation Expectations: USA 12% 10% 8% 6% 4% 2% 0% -2% -4% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Michigan ZEW Economist OECD WEO Consensus SPF Cleveland Fed Atlanta Fed Livingston CBO WSJ Greenbook CPI INFLATION Light colored shading, NBER reference cycle chronology. 10 Inflation Expectations: Eurozone 6% 5% 4% 3% 2% 1% 0% -1% -2% 91 99 05 13 19 1989 19 1993 1995 1997 19 2001 2003 20 2007 2009 2011 20 2015 2017 20 European Commission BUS European Commission CONS ZEW Economist ECB OECD WEO SPF Consensus CPI INFLATION Light colored shading, CEPR reference cycle chronology; horizontal shading, inflation tolerance range. CPI refers to HICP index. 11 Output Gap Range of Estimates: JAPAN JAPAN 16% 12% 8% 4% 0% -4% -8% -12% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Gap1 Gap2 Gap3 Gap4 Gap5 Gap6 12 Output Gap Range of Estimates: U.S.A. United States 8% 4% 0% -4% -8% -12% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Gap1 Gap2 Gap3 Gap4 Gap5 Gap6 13 Output Gap Range of Estimates: Eurozone Eurozone 6 4 2 0 -2 -4 -6 -8 7 1995 1997 1999 2001 2003 2005 200 2009 2011 2013 2015 2017 2019 Gap2 Gap3 Gap4 Gap5 Gap6 Gap1: CBO (U.S), BoJ (Japan), None for Eurozone; Gap2: Growth rate; Gap3: Hamilton filter (simple); Gap4: One-sided H-P Filter; Gap5: Christiano-Fitzgerald filter; Gap6: mean-adjusted residuals from a regression of log Real GDP on trend breaks estimated via Bai-Perron method. Additional information in the main body of the text (Table 3). 14 Figure – Money Supply Levels and 1.6E+13 1.4E+13 1.2E+13 1.0E+13 Billions8.0E+12 Growth Rates: Japan, USA, and 6.0E+12 4.0E+12 2.0E+12 0.0E+00 1981 .24 1983 the Eurozone 1985 .20 1987 .16 1989 .12 1991 1993 .08 1995 .04 USA Two-year log difference in levels 1997 .00 1999 -.04 2001 Japan 2003 Note: The top figure plots M3 as defined in the USA, Japan, and 2005 bottom plots represent growth1981 r MABMM301EZQ189S(Eurozone), MABMM301USM189S (USA), MABMM301JPJPM 2007 1983 Eurozone (Japan). 2009 1985 2011 1987 2013 1989 2015 1991 2017 1993 1995 ates for M3 over a two-year peri USA 1997 1999 2001 Japan 2003 2005 2007 Eurozone the Eurozone. In billions.2009 The od. Data from FRED: 2011 2013 2015 2017 189S 15 TFP istotalfactorproductivity; Productivity inJapan,U.S.,andtheEurozone Normalized scale Normalized scale Normalized scale -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 -1 -3 -2 -1 -3 -2 0 1 2 0 1 2 1981 1981 1981 1983 1983 1983 1985 1985 1985 AWM is the area wide model. AWM istheareawidemodel. 1987 1987 1987 TFP 1989 1989 1989 1991 1991 1991 1993 TFP 1993 1995 1993 Labor productivity Labor Labor productuvity 1995 1995 1997 EUROZONE 1999 1997 1997 JAPAN USA AWM 2001 1999 1999 2003 2001 2001 2005 2003 2003 2007 2005 A 2005 2009 TFP MECO 2007 2007 FRED2 TFP - 2011 2009 2009 2013 2011 2015 2011 2013 2017 2013 2015 2019 2015 2021 2017 2017 2023 2019 16 Institutional Resilience 5 4 x de n 3 ce I ce n 2 Resilie 1 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 Japan USA Eurozone Data and methodology from Bordo and Siklos (2019). 17 Population Life Expectancy in Years Older dependents (65+) to working age population 82 84 86 20 30 40 50 72 74 76 78 80 10 0 1981 1981 1983 1983 1985 1985 1987 1987 1989 1989 1991 1991 EUROZONE 1993 1993 JPN 1995 1995 1997 1997 1999 1999 USA 2001 JAPAN 2001 2003 2003 2005 2005 EUR 2007 2007 USA 2009 2009 2011 2011 2013 2013 2015 2015 2017 2017 18 2019 2019 Per Capital real GDP (USD) 70,000 60,000 50,000 40,000 30,000 US dollars 20,000 10,000 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 per capita real GDP: USA per capita real GDP: JPN per capita real GDP: EUR From World Bank World Development Indicators. Per Capita real GDP (Domestic Currency Units) 2 1 0 -1 Normalized Scale -2 -3 9 3 993 007 015 1 1995 1997 199 2001 2003 2005 2 2009 2011 201 2 2017 2019 USA Japan Eurozone Note: For US series GDPC1 (real GDP), POPTHM (population); for Japan JPNTGDPEXP, POPTOTJPA647NWDB; for the Eurozone CLVMEURSCAB1GQEA19, SPPOPTOTLEMU. Source is FRED. 19 PolicyIndicators Fiscal andFiltered Adjusted Cyclically Deviation from one-sided H-P filter Percent of poitential output -8% -6% -4% -2% -12 0% 2% 12 -4 -8 0 4 8 1981 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 EUR_FISCAL_PROXY 1983 1985 1987 1989 EUROZONE 1991 1993 1995 USA_FISCAL_PROXY 1997 JAPAN 1999 2001 2003 2005 UNITED STATES 2007 2009 JPN_FISCAL_PROX 2011 2013 2015 2017 20 2019 Y GGNLBAJPA188N). fortheUSarefro Series names Additional FiscalPolicyIndicators:JapanandtheU.S. Percent of GDP 100% 120% -20% 20% 40% 60% 80% -12 -10 0% -8 -6 -4 -2 4 0 2 1981 1981 1983 1983 1985 1985 1987 1987 m FRED. Data forJapanalsofrom m 1989 1989 1991 1991 FYFSDFYGDP Net lending (+) / Net borrowing (-1) 1993 1993 1995 1995 UNITED STATES 1997 1997 JAPAN 1999 1999 2001 2001 GFDEGDQ188S 2003 2003 FRED(series 2005 2005 2007 2007 2009 2009 2011 2011 2013 2013 2015 2015 2017 2017 21 2019 2019 Inflation Distribution Classifications Tabulation of Observed Inflation: JAPAN Sample (adjusted): 1980Q1 2019Q2 Included observations: 158 after adjustments Number of categories: 5 Cumulative Cumulative Value Count Percent Count Percent [-2, 0) 57 36.08 57 36.08 [0, 2) 56 35.44 113 71.52 [2, 4) 37 23.42 150 94.94 [4, 6) 6 3.80 156 98.73 [6, 8) 2 1.27 158 100.00 Total 158 100.00 158 100.00 Tabulation of Observed Inflation: USA Sample (adjusted): 1981Q1 2019Q1 Included observations: 153 after adjustments Number of categories: 4 Cumulative Cumulative Value Count Percent Count Percent [-5, 0) 4 2.61 4 2.61 [0, 5) 136 88.89 140 91.50 [5, 10) 11 7.19 151 98.69 [10, 15) 2 1.31 153 100.00 Total 153 100.00 153 100.00 22 Tabulation of Observed Inflation: EUROZONE Sample (adjusted): 1997Q1 2018Q4 Included observations: 88 after adjustments Number of categories: 5 Cumulative Cumulative Value Count Percent Count Percent [-1, 0) 5 5.68 5 5.68 [0, 1) 13 14.77 18 20.45 [1, 2) 31 35.23 49 55.68 [2, 3) 35 39.77 84 95.45 [3, 4) 4 4.55 88 100.00 Total 88 100.00 88 100.00 23 Varieties of Calibrated Taylor 12% 8% 4% 0% -4% Rules: Japan (JPN), U.S.