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Inflation, expectation, and the real economy in Japan

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  • Ono, Masanori

Abstract

This paper investigates the effectiveness of unconventional monetary policy in Japan by taking into account people's price expectations. First, a stability test revealed that the effects of the 2011 earthquake were not strong enough to have caused a structural break in the economy. Second, the impulse response analysis reveals that an expansionary policy has a temporary, positive effect on financial and real economic variables. However, the inflation rate does not increase to a statistically significant level from zero. Third, market participants’ expectation of a devaluation of the yen occurs in advance of an actual increase in the monetary base.

Suggested Citation

  • Ono, Masanori, 2017. "Inflation, expectation, and the real economy in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 45(C), pages 13-26.
    • Handle: RePEc:eee:jjieco:v:45:y:2017:i:c:p:13-26
    DOI: 10.1016/j.jjie.2017.05.002
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    Cited by:

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    2. Shahriyar Aliyev & Evžen Kočenda, 2023. "ECB monetary policy and commodity prices," Review of International Economics, Wiley Blackwell, vol. 31(1), pages 274-304, February.
    3. Liu, Tie-Ying & Lee, Chien-Chiang, 2021. "Global convergence of inflation rates," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).

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    More about this item

    Keywords

    Unconventional monetary policy; Stability test; Impulse responses;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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