Kiyohiko Nishimura opened his comments with the observation that Gunther Schnabl's work is already infamous among English-speaking economists because it has provoked discussion about differences in estimation approaches used by different papers, and because the cross-country evidence has raised consideration of alternative explanations. To illustrate the first point Nishimura observed that controls for the real exchange rate are missing from Schnabl's work, which may lead to differences with prior work. On the second point, Nishimura noted that the experiences in Japan and Europe may have a demographic explanation: Japan's again, and asset bubbles both started around 1990, while Europe's again peak and bubble coincide with the more recent crisis.

Nishimura cautioned further about the risks in monetary theory of examining the short-term economy with old Keynsesian economic approaches while ignoring the importance of alternative explanations. The population explanation is relevant, because it ties directly to the potential growth rate. In...

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