JFR-rg Part II: Dynamic Extensions, Time Constraints, and Investment Design in High-Debt, Low-Growth Economies
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arXiv
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| Format: | Preprint |
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2026
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| _version_ | 1866911637477261312 |
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| author | Wakimoto, Hirofumi |
| author_facet | Wakimoto, Hirofumi |
| contents | This paper develops the logical extension of the JFR-rg framework introduced in Part I within the same observables-centered and regime-conditional architecture. Six extensions are formalized: the Virtuous Ratchet (E1), the corrected Repression Dividend Multiplier (E2), the Debt Reduction Paradox (E3), the Multi-Country Repression Equilibrium (E4), the Demographic-$ϕ$ Clock (E5), and the Institutional Control Rights Index (E6). Together, these clarify the dynamic implications of a JFR-rg regime for path dependence, institutional erosion, growth-enhancing investment, and regime transition in high-debt, low-growth economies.
The paper's claim of logical completion is architectural rather than universal. It does not claim a full welfare-theoretic or political-economy microfoundation. Rather, it shows that the principal dynamic implications internal to Part I can be stated in closed form, and that two natural excluded generalizations -- bounded stochastic perturbations and endogenous fiscal responses -- preserve the regime logic.
A Minimal Equilibrium Closure is then introduced to endogenize the sovereign risk premium through a two-layer domestic demand structure and a complementarity condition. The paper also formulates the statistical problem of inferring a latent regime boundary under one-sided regime dominance. The inferential contribution is conservative by design: it constructs outer statistical summaries of the relevant boundary objects rather than forcing point classification when the observables remain compatible with multiple nearby regime readings.
Comparison with Blanchard (2019), Hoshi-Ito (2014), and Mehrotra-Sergeyev (2021) shows where JFR-rg adds explanatory value in the Japanese case: not by replacing standard debt-sustainability analysis, but by endogenizing the institutional conditions under which low sovereign rates are sustained, weakened, or lost. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2605_00019 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | JFR-rg Part II: Dynamic Extensions, Time Constraints, and Investment Design in High-Debt, Low-Growth Economies Wakimoto, Hirofumi General Economics Economics This paper develops the logical extension of the JFR-rg framework introduced in Part I within the same observables-centered and regime-conditional architecture. Six extensions are formalized: the Virtuous Ratchet (E1), the corrected Repression Dividend Multiplier (E2), the Debt Reduction Paradox (E3), the Multi-Country Repression Equilibrium (E4), the Demographic-$ϕ$ Clock (E5), and the Institutional Control Rights Index (E6). Together, these clarify the dynamic implications of a JFR-rg regime for path dependence, institutional erosion, growth-enhancing investment, and regime transition in high-debt, low-growth economies. The paper's claim of logical completion is architectural rather than universal. It does not claim a full welfare-theoretic or political-economy microfoundation. Rather, it shows that the principal dynamic implications internal to Part I can be stated in closed form, and that two natural excluded generalizations -- bounded stochastic perturbations and endogenous fiscal responses -- preserve the regime logic. A Minimal Equilibrium Closure is then introduced to endogenize the sovereign risk premium through a two-layer domestic demand structure and a complementarity condition. The paper also formulates the statistical problem of inferring a latent regime boundary under one-sided regime dominance. The inferential contribution is conservative by design: it constructs outer statistical summaries of the relevant boundary objects rather than forcing point classification when the observables remain compatible with multiple nearby regime readings. Comparison with Blanchard (2019), Hoshi-Ito (2014), and Mehrotra-Sergeyev (2021) shows where JFR-rg adds explanatory value in the Japanese case: not by replacing standard debt-sustainability analysis, but by endogenizing the institutional conditions under which low sovereign rates are sustained, weakened, or lost. |
| title | JFR-rg Part II: Dynamic Extensions, Time Constraints, and Investment Design in High-Debt, Low-Growth Economies |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2605.00019 |