Perspectives on Japan’s continuing exorbitant privilege

With renewed doubt about the scale, scope, and even the sign of the dollar’s “exorbitant privilege,” Rogoff and Tashiro revisit Japan’s case, in particular, the persistent excess return on its external balance sheet, which derives in part from its ability to issue safe government debt at scale. Retaining this privilege is conditional, however, on Japan managing its debt dynamics and keeping inflation under control.