This project consists of three subprojects.

Figure 1　Project structure

Subproject (1) constructs a macroeconomic theory to account for transition to a low-growth stage, long-term economic stagnation and asset price bubbles, and widening wealth inequality in a cohesive framework. To this end, focus is placed on the relative strength of people’s desire for wealth holding with respect to that of consumption. The effects of macroeconomic policies are scrutinized within this framework.
Subproject (2) examines quantitative characteristics of wealth preferences through large-scale questionnaire surveys and economic experiments. In the surveys, hypothetical questions are asked to identify how one’s income and wealth impact consumption.
Subproject (3) explores micro-foundations of institutions, rules and regulations that can spur product innovation, so as to stimulate aggregate demand and better utilize idle resources.

Economic stagnation, malfunctioning of financial markets, and widening wealth inequality have so far been analyzed separately, under the presumption that they are rooted in various economic distortions and imperfections. This research project takes a novel stance in that it relies on a single factor—relative preferences for wealth and consumption—to account for these issues in a unified manner. We expect that our theoretical framework will shed new light on the underlying mechanisms of long-term stagnation and enable us to provide new policy insights to cope with pathological social problems often faced by advanced economies.

Figure 2　Consumption and wealth preferences