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What to do about Japan’s large corporate surplus?

Japan’s large corporate sector surpluses are a key source of deflationary pressure. Corporate savings surged in the 1990s, primarily because net interest payments slumped, and have since remained stubbornly high. Unfortunately, workers have benefited little from the resulting improvement in profit margins as the labour share of national income has fallen. The government could reduce corporate sector surpluses by strengthening the bargaining power of workers and by raising the corporate tax rate

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