Using the data in the table – the CPI from Japan, calculate the rate of inflation in Japan a year leading up to April 2013. That is, calculate the inflation rate between March 2012 to March 2013. Assuming that nominal interest rates in Japan are zero (they are!), what is the ex-post real rate of interest from March 2012 to March 2013? In this case, are consumers more willing to save or spend? Explain.b) (5 points) We now are going to examine whether or not this QE appears to be working in Japan. Calculate the rate of inflation from April 2013 (the first month of QE) to April 2014. Assuming again that nominal interest rates are zero during this period, what is the ex-post real interest rate now? In this case, are consumers more willing to save or spend? Explain. Does it appear that this round of QE is working in Japan, why or why not?c) (5 points) We now update to see if QE is still working. Calculate the rate of inflation from May 2014 to May 2015. Assuming again that nominal interest rates are zero during this period, what is the ex-post real interest rate now? In this case, are consumers more willing to save or spend? Explain. Does it appear that QE in Japan is still working? Why or why not?
The CPI from Japan, calculate the rate of inflation
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