The Effectiveness of Non-traditional Monetary Policy Measures: The Case of the Bank of Japan
AbstractThis paper summarizes non-traditional monetary policy measures adopted by the Bank of Japan (BOJ) during the last two decades and by other G7 central banks since the start of the current global financial turmoil and analyzes the effectiveness of such measures. The paper begins with a typology of policies usable near the zero lower bound on interest rates (ZLB). They are:(i) forward guidance of future policy rates;(ii) targeted asset purchases;(iii) and quantitative easing (QE). Using this typology, I review the measures adopted by the BOJ and other central banks. I then offer a news analysis of the effects of the measures adopted by the BOJ on asset prices, comparing them with those adopted by the Fed. Many of the measures, with the exception of strategy (iii), are shown to have moved asset prices in the expected directions. Another exception is that most of the monetary easing measures failed to weaken the yen. Despite some effects on asset prices, however, the measures have failed to stop the deflationary trend of the Japanese economy clearly. I discuss some possible reasons for this and more general implications for monetary policy.
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Bibliographic InfoPaper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-252.
Length: 29 pages
Date of creation: Aug 2011
Date of revision:
Other versions of this item:
- Kazuo Ueda, 2012. "The Effectiveness Of Non‐Traditional Monetary Policy Measures: The Case Of The Bank Of Japan," The Japanese Economic Review, Japanese Economic Association, vol. 63(1), pages 1-22, 03.
- Kazuo Ueda, 2011. "The Effectiveness of Non-traditional Monetary Policy Measures: The Case of the Bank of Japan," CIRJE F-Series CIRJE-F-814, CIRJE, Faculty of Economics, University of Tokyo.
- NEP-ALL-2011-09-05 (All new papers)
- NEP-CBA-2011-09-05 (Central Banking)
- NEP-MON-2011-09-05 (Monetary Economics)
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- Okina, Kunio & Shiratsuka, Shigenori, 2004. "Policy commitment and expectation formation: Japan's experience under zero interest rates," The North American Journal of Economics and Finance, Elsevier, vol. 15(1), pages 75-100, March.
- Ben S. Bernanke & Vincent R. Reinhart, 2004. "Conducting Monetary Policy at Very Low Short-Term Interest Rates," American Economic Review, American Economic Association, vol. 94(2), pages 85-90, May.
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- Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
- Kazuo Ueda, 2012.
"Deleveraging and Monetary Policy: Japan since the 1990s and the United States since 2007,"
CARF-F-283, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Kazuo Ueda, 2012. "Deleveraging and Monetary Policy: Japan since the 1990s and the United States since 2007," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 177-202, Summer.
- Kazuo Ueda, 2011. "Deleveraging and Monetary Policy: Japan since the 1990s and the United States since 2007," CIRJE F-Series CIRJE-F-828, CIRJE, Faculty of Economics, University of Tokyo.
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