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Japan’s monetary policy in a challenging environment

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  • Sayuri Shirai

Abstract

The Bank of Japan (BOJ) is attempting to overcome the mild deflation that has lasted in Japan for nearly 15 years and to achieve its 2 % price stability target. In the face of the zero lower bound on short-term interest rates, the BOJ introduced nonstandard monetary easing policy called quantitative and qualitative monetary easing (QQE) to achieve the target. So far, a number of positive outcomes have materialized. Compared with 2012, stock prices have been higher; private consumption is more resilient; more active real estate investment are taking place; and the yen’s exchange rate has been at more depreciated levels. Most importantly, the growth momentum of the economy is gaining traction and the unemployment rate is approaching the pre-crisis lowest level. There are some signs of the economy moving out of deflation although the BOJ needs some time to reach the 2 % target. This paper highlights the main features of QQE with conceptual explanations by reviewing the previous major monetary easing policies: quantitative monetary easing adopted in 2001–2006 and comprehensive monetary easing introduced in 2010 but was replaced with QQE in April 2013. Copyright Eurasia Business and Economics Society 2014

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  • Sayuri Shirai, 2014. "Japan’s monetary policy in a challenging environment," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 3-24, June.
    • Handle: RePEc:spr:eurase:v:4:y:2014:i:1:p:3-24
    DOI: 10.1007/s40822-014-0006-1
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    Cited by:

    1. Ergun Ermisoglu & Yasin Akcelik & Arif Oduncu & Temel Taskin, 2014. "Effects of additional monetary tightening on exchange rates," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 71-79, June.
    2. Emre Ozsoz & Mustapha Akinkunmi & Ismail Cagri Ay & Ademola Bamidele, 2017. "How Cbn Confronted The Meltdown: The Global Financial Crisis And The Central Bank Of Nigeria’S Response," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(01), pages 147-161, March.
    3. Hakan Danis, 2017. "Nonlinearity and asymmetry in the monetary policy reaction function: a partially generalized ordered probit approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 7(2), pages 161-178, August.
    4. Dániel Horváth & Róbert Szini, 2015. "The safety trap – the financial market and macroeconomic consequences of the scarcity of safe assets," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(1), pages 111-138.
    5. repec:cbh:journl:v:14:y:2015:i:1:p:111-138 is not listed on IDEAS
    6. Ahmet Aysan & Salih Fendoglu & Mustafa Kilinc, 2014. "Managing short-term capital flows in new central banking: unconventional monetary policy framework in Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 4(1), pages 45-69, June.
    7. Matsuki, Takashi & Sugimoto, Kimiko & Satoma, Katsuhiko, 2015. "Effects of the Bank of Japan’s current quantitative and qualitative easing," Economics Letters, Elsevier, vol. 133(C), pages 112-116.
    8. Margarita Rubio & José A. Carrasco-Gallego, 2017. "Spain And The Crisis: Housing Prices, Credit And Macroprudential Policies," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(01), pages 109-133, March.
    9. Ad Van Riet, 2017. "A New Era For Monetary Policy: Challenges For The European Central Bank," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(01), pages 57-86, March.
    10. Michael Diemer & Uwe Vollmer, 2015. "What makes banking crisis resolution difficult? Lessons from Japan and the Nordic Countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 251-277, December.

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    More about this item

    Keywords

    Japan; Quantitative and qualitative monetary easing; Signaling effect; Forward guidance; E52; E58;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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