While the economy will be affected by the front-loaded increase and subsequent decline in demand prior to and after the two scheduled consumption tax hikes, it is likely to continue growing at a pace above its potential, as a trend, as a virtuous cycle among production, income, and spending is maintained.
The nonbank sector has produced material benefits: increased market liquidity, greater diversity of funding sources, and – it is often claimed – a more efficient allocation of risk to investors. However, threats to the stability of the overall financial system have also increased, as was evident in the recent financial crisis.