According to wikipedia, "overdetermination is a phenomenon whereby a single observed effect is determined by multiple causes at once, any one of which alone might be enough to account for ("determine") the effect. That is, there are more causes present than are necessary to generate the effect".
In this strictly technical sense, Japan's deflation problem is overdetermined - there are multiple causes at work, any one of which could account for the observed phenomenon. Those who have been following the debate can simply choose their favourite - balance sheet recession, liquidity trap, fertility trap - each one, taken alone, could be sufficient as a cause. The problem this situation presents is simply epistemological - in a scientific environment the conundrum could be resolved by devising the requisite, consensually grounded, tests.
But I would here like to use the term "overdetermination" in another, less technical, sense, since it seems
I’ve consistently made the following arguments about Abenomics:
1. The data suggests that the new BOJ policy has raised inflation, and inflation expectations. There is a mountain of evidence on that point.
2. Japanese inflation is likely to fall short of 2% (except for the sales tax bounce) unless the BOJ takes further steps. That’s less clear than the first point, but seems a reasonable way to read market indicators such as long-term bond yields.
3. It really doesn’t matter whether they hit 2% inflation, they shouldn’t even target inflation. Rather what matters is if they can move NGDP growth into positive territory–at least 2% to 3%. It’s still unclear if they will achieve that, but they’ve made progress.
Many commenters sent me a Noah Smith post that correctly pointed out that the more reliable “core-core” inflation rate is only running about 0.7%. Mark Sadowski pointed out
Economic and Political Quagmires
We want to briefly take another look at the situation in four of the emerging market countries that have recently been the focus of considerable market upheaval. The countries concerned are Turkey, Venezuela, Argentina and South Africa. There are considerable differences between these countries. The only thing that unites them is a worrisome trend in their trade and/or current account balances and the recent massive swoon in their currencies as foreign investors have exited their markets (this in turn has pressured the prices of securities). There is currently an economic and political crisis in three of the four countries, with South Africa the sole exception.
However, even South Africa is feeling the heat from the fact that it has a large current account deficit and the ongoing exodus of foreign investors from emerging markets. However, the country is actually used to experiencing vast fluctuations in foreign