IESET.
Hypotheses·monetary·japan_sargent_wallace_refutation_1990_2024

Japan crossed every debt-to-GDP threshold predicted by Sargent-Wallace (1981) "unpleasant monetarist arithmetic" framing — 100% (1996), 150% (2002), 200% (2010), 250% (2020) — without producing the predicted outcomes: 10y JGB yields fell rather than rose across the full 1990-2024 window, CPI inflation averaged below 1% over 1995-2020 and did not breach 4% even at the 2022-2024 global price shock peak, and no sovereign-debt distress event occurred.

The Sargent-Wallace prediction that a sufficiently large debt stock forces eventual monetisation and inflation regardless of central-bank preferences is refuted at a sovereign currency-issuer over a 34-year window.

WEAKENEDengine/runs/japan_sargent_wallace_refutation_1990_2024

WEAKENED — no observed yield/CPI/regression breach after crossed thresholds; local IMF debt vintage does not cross 250%; CPI coverage stops 2021; distress-event count is spec-coded, not machine-fetched

confidence cueThis test cuts against the claim as written or misses its pre-declared threshold.

policy briefNeeds review

In ordinary language

In plain terms, this asks whether gross public debt pct income is actually linked to better or worse jgb yield 10y from 1990 to 2024.

plain answer

no observed yield/CPI/regression breach after crossed thresholds; local IMF debt vintage does not cross 250%; CPI coverage stops 2021; distress-event count is spec-coded, not machine-fetched

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 1990 to 2024, using a descriptive design.

what was measured
What changed
  • Gross public debt pct income
  • Boj jgb holdings pct outstanding
What we checked
  • Jgb yield 10y
  • Jgb yield 30y
  • Cpi inflation yoy
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/japan_sargent_wallace_refutation_1990_2024
1007550250199020072024JPN
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show jgb_yield_10y across 1 sampled countries over 1990–2024.
The shapes above are stylised — none of the lines are real data.
Placeholder for japan_sargent_wallace_refutation_1990_2024. Published chart will be generated from engine/runs/japan_sargent_wallace_refutation_1990_2024/chart_data.json.

Pre-registration

pre-registered
first-spec commit 098ce96 · 2026-04-30T12:57:33Z
run generated · 2026-05-16T13:19:42Z

Japan crossed every debt-to-GDP threshold predicted by Sargent-Wallace (1981) "unpleasant monetarist arithmetic" framing — 100% (1996), 150% (2002), 200% (2010), 250% (2020) — without producing the predicted outcomes: 10y JGB yields fell rather than rose across the full 1990-2024 window, CPI inflation averaged below 1% over 1995-2020 and did not breach 4% even at the 2022-2024 global price shock peak, and no sovereign-debt distress event occurred. The Sargent-Wallace prediction that a sufficiently large debt stock forces eventual monetisation and inflation regardless of central-bank preferences is refuted at a sovereign currency-issuer over a 34-year window.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if any of the following hold over 1990-2024: (a) 10y JGB yield exceeds 4% in any month, (b) CPI YoY exceeds 5% in any 12-month rolling window, (c) Japan experiences a sovereign-debt distress event (missed coupon, IMF program, or forced restructuring of JGBs), or (d) a structural break in the debt-to-yield relationship at p<0.01 produces a positive coefficient on debt-to-GDP that survives output-gap and demographic controls over the sample.

formal test & threshold
test:      japan_debt_yield_inflation_threshold_pattern_1990_2024
threshold: max(jgb_10y_yield) < 4% AND max(cpi_yoy_12m) < 5% AND zero distress events AND debt_to_yield_coefficient not significantly positive at p<0.01

Method

Template
descriptive
Clustering
episode
Sample
1 countries · 1990 – 2024
Evidence type
descriptive

Descriptive multi-metric pattern check across the four debt-to-GDP threshold-crossings (1996, 2002, 2010, 2020) and the full 1990-2024 yield/inflation/distress trajectory. Secondary regression: cointegration test on debt-to-GDP and 10y JGB yield 1990-2015 (pre-YCC) with output-gap, working-age share, and current-account controls. Sargent-Wallace null requires positive long-run cointegrating coefficient on debt; falsification requires non-positive at p<0.01.

Data

VariableSourceTransform
jgb_yield_10y
outcome
boj:bond_yields_10ytier 1
fred:IRLTLT01JPM156Ntier 1
level_pct
jgb_yield_30y
outcome
boj:bond_yields_30ytier 1
fred:IRLTLT30JPM156Ntier 1
level_pct
cpi_inflation_yoy
outcome
fred:JPNCPIALLMINMEItier 1
boj:CPItier 1
pct_change_yoy
japan_sovereign_distress_event_count
outcome
constructed:zero events 1990-2024 documented from Moody's-S&P-Fitch sovereign tables and IMF Article IVtier 5
count
gross_public_debt_pct_gdp
treatment
imf:GGXWDG_NGDPtier 2
world_bank_wdi:GC.DOD.TOTL.GD.ZStier 2
level_pct
boj_jgb_holdings_pct_outstanding
treatment
boj:flow_of_funds_jgb_holdingstier 1
level_pct
real_gdp_growth
control
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
pct_change_yoy
working_age_population_share
control
world_bank_wdi:SP.POP.1564.TO.ZStier 2
level_pct
current_account_pct_gdp
control
imf:BCA_NGDPDtier 2
level
oil_price
control
imf_pcps:POILBREtier 1
log_diff

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — japan_sargent_wallace_refutation_1990_2024

Verdict: WEAKENED — no observed yield/CPI/regression breach after crossed thresholds; local IMF debt vintage does not cross 250%; CPI coverage stops 2021; distress-event count is spec-coded, not machine-fetched

Pre-registration

  • Claim: Japan crossed every debt-to-GDP threshold predicted by Sargent-Wallace (1981) "unpleasant monetarist arithmetic" framing — 100% (1996), 150% (2002), 200% (2010), 250% (2020) — without producing the predicted outcomes: 10y JGB yields fell rather than rose across the full 1990-2024 window, CPI inflation averaged below 1% over 1995-2020 and did not breach 4% even at the 2022-2024 global price shock peak, and no sovereign-debt distress event occurred. The Sargent-Wallace prediction that a sufficiently large debt stock forces eventual monetisation and inflation regardless of central-bank preferences is refuted at a sovereign currency-issuer over a 34-year window.
  • Falsification rule: The hypothesis is falsified if any of the following hold over 1990-2024: (a) 10y JGB yield exceeds 4% in any month, (b) CPI YoY exceeds 5% in any 12-month rolling window, (c) Japan experiences a sovereign-debt distress event (missed coupon, IMF program, or forced restructuring of JGBs), or (d) a structural break in the debt-to-yield relationship at p<0.01 produces a positive coefficient on debt-to-GDP that survives output-gap and demographic controls over the sample.
  • Falsification test: japan_debt_yield_inflation_threshold_pattern_1990_2024

Comparison

  • shape: japan_debt_threshold_gate
  • country: JPN
  • period: [1990, 2024]
  • threshold_rows: [{'threshold_debt_pct_gdp': 100.0, 'status': 'crossed', 'cross_year': 1998, 'debt_pct_gdp_at_cross': 101.6, 'pre_cross_yield': {'year': 1997, 'value': 2.373666666666667}, 'max_10y_yield_next_2y': 1.7489999999999999, 'yield_spike_pp_next_2y': -0.6246666666666669, 'max_cpi_yoy_next_2y': 0.648418220563296, 'yield_spike_breach_gt_3pp': False, 'cpi_breach_gt_5pct': False}, {'threshold_debt_pct_gdp': 150.0, 'status': 'crossed', 'cross_year': 2005, 'debt_pct_gdp_at_cross': 153.4, 'pre_cross_yield': {'year': 2004, 'value': 1.4926666666666666}, 'max_10y_yield_next_2y': 1.7405, 'yield_spike_pp_next_2y': 0.24783333333333335, 'max_cpi_yoy_next_2y': 0.2538075233387893, 'yield_spike_breach_gt_3pp': False, 'cpi_breach_gt_5pct': False}, {'threshold_debt_pct_gdp': 200.0, 'status': 'crossed', 'cross_year': 2013, 'debt_pct_gdp_at_cross': 201.2, 'pre_cross_yield': {'year': 2012, 'value': 0.8355833333333332}, 'max_10y_yield_next_2y': 0.6896666666666667, 'yield_spike_pp_next_2y': -0.14591666666666658, 'max_cpi_yoy_next_2y': 2.7592334693625986, 'yield_spike_breach_gt_3pp': False, 'cpi_breach_gt_5pct': False}, {'threshold_debt_pct_gdp': 250.0, 'status': 'not_crossed_in_local_vintage', 'max_local_debt_pct_gdp': 228.8}]
  • post_first_debt_crossing_gate: {'start_year': 1998, 'max_10y_yield_after_first_cross': 1.7489999999999999, 'max_cpi_yoy_after_first_cross': 2.7592334693625986, 'cpi_latest_year': 2021}
  • debt_yield_regression: {'sample_years': [1998, 2015], 'n_obs': 18, 'debt_to_yield_coefficient': -0.0002596738318602571, 'debt_to_yield_p_value': 0.9774096917846387, 'positive_significant_at_1pct': False}
  • distress_event_count: 0
  • distress_event_count_source: spec-coded zero-event claim; not a machine-fetched vintage
  • data_coverage: {'debt_years': [1980, 2031], 'jgb_years': [1989, 2026], 'cpi_years': [1955, 2021]}

Extracted threshold: {'percent': 100.0}

Variables resolved

  • boj:bond_yields_10y; fred:IRLTLT01JPM156N → jgb_yield_10y (outcome, publisher=fred, n=38)
  • fred:JPNCPIALLMINMEI; boj:CPI → cpi_inflation_yoy (outcome, publisher=fred, n=67)
  • imf:GGXWDG_NGDP; world_bank_wdi:GC.DOD.TOTL.GD.ZS → gross_public_debt_pct_gdp (treatment, publisher=imf, n=8113)
  • world_bank_wdi:NY.GDP.MKTP.KD.ZG → real_gdp_growth (controls, publisher=world_bank_wdi, n=13897)
  • world_bank_wdi:SP.POP.1564.TO.ZS → working_age_population_share (controls, publisher=world_bank_wdi, n=16965)
  • imf:BCA_NGDPD → current_account_pct_gdp (controls, publisher=imf, n=10556)
  • imf_pcps:POILBRE → oil_price (controls, publisher=imf_pcps, n=37)

Variables missing data

  • boj:bond_yields_30y; fred:IRLTLT30JPM156N (outcome, name=jgb_yield_30y)
  • constructed: zero events 1990-2024 documented from Moody's-S&P-Fitch sovereign tables and IMF Article IV (outcome, name=japan_sovereign_distress_event_count)
  • boj:flow_of_funds_jgb_holdings (treatment, name=boj_jgb_holdings_pct_outstanding)

Generated by scripts/run_descriptive.py at 2026-05-16T13:19:42+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Sister candidate to the existing japan_public_debt_solvency_inflation_independence draft, framed specifically as a Sargent-Wallace falsification test rather than a generic descriptive trajectory. MMT and post-Keynesian schools predict that a sovereign currency-issuer with a captive bond market and a domestic saver base will not face the Sargent-Wallace arithmetic constraint; this hypothesis registers the prediction ex-post against the documented Japanese trajectory. Counters the textbook "household-budget-analogue" framing applied uncritically to advanced-economy sovereigns.

Authored framework. Read the transparency note.