IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Policy Debates on Public Finance between the Ministry of Finance and the Bank of Japan from 1930 to 1936

Listed author(s):
  • Ide, Eisaku

    (Yokohama National U)

Registered author(s):

    To appropriate additional sources of fiscal revenue, the Bank of Japan (BOJ) started direct underwriting of new deficit-financing government bond, (GBs) (BOJ underwriting) on November 25, 1932. This paper examines the BOJ's underwriting policymaking process through the use of newly available archived documents from the BOJ and the Ministry of Finance (MOF). Evidence from these documents contradicts conventional arguments that the BOJ was forced to underwrite GBs due to Finance Minister Korekiyo Takahashi's firm request and that it regarded the policy measure as temporary. Instead, the BOJ was confident it could exert monetary control through the market operation of selling underwritten GBs (selling operations). In addition, the BOJ willingly accepted the underwriting, expecting it to reinforce its influence over financial institutions. BOJ policymakers partly forecasted the course of events. First, the BOJ started underwriting during the Takahashi economic policy period (1931-36). Once it started, it was difficult for the BOJ to stop underwriting bonds. The BOJ was forced to continue underwriting deficit-financing bonds because of expanding financial demand. Second the MOF used very complex and irregular budgeting methods beginning with the budget process of fiscal 1936. This created a large deferred fiscal burden that concealed the realities of fiscal deficits.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.

    Volume (Year): 21 (2003)
    Issue (Month): 4 (December)
    Pages: 87-103

    in new window

    Handle: RePEc:ime:imemes:v:21:y:2003:i:4:p:87-103
    Contact details of provider: Postal:
    2-1-1 Nihonbashi, Hongoku-cho, Chuo-ku, Tokyo 103

    Phone: +81-3-3279-111
    Fax: +81-3-3510-1265
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ime:imemes:v:21:y:2003:i:4:p:87-103. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kinken)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.