From the medium-term perspective, Japan needs to carry out the structural overhaul of its public sector, too. For instance, the legacy of an activist fiscal policy throughout the 1990s is still with us, as shown by the huge public debt nearing 160% of our GDP. This leads us to conclude that fiscal consolidation should be examined in a well thought-out manner.
BIS Review 59/2004  1  have substantial effects on trade or capital flows, as short-term fluctuations in exchange rates are easily hedged. Exchange rates also exhibit long-horizon volatility, of course; but, although the swings in the exchange value of the dollar over the past thirty years have been large, so have been the changes in the global macroeconomic environment.