Interventions and Japanese economic recovery
This paper attempts to explain possible reasons and objectives behind the 35 trillion yen (7% of GDP) interventions conducted by the Japanese monetary authorities from January 2003 to March 2004, and to discuss whether the interventions achieved the presumed objectives: making the movement of the yen flexible but orderly, and helping economic recovery. The motivation of starting intervention in January 2003 was to keep the yen from appreciating in the midst of financial and macroeconomic weakness. The economy started to show some strength in the second half of 2003, but interventions continued, with a brief pause in September. Reasons for interventions after September are two-fold. First, the interventions provided opportunities for unsterilized interventions. Second, the monetary authorities were extremely sensitive to speculative activities in the market.
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- Takatoshi Ito & Tomoyoshi Yabu, 2004.
"What Prompts Japan to Intervene in the Forex Market? A New Approach to a Reaction Function,"
NBER Working Papers
10456, National Bureau of Economic Research, Inc.
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- Takatoshi Ito & Frederic S. Mishkin, 2004.
"Two Decades of Japanese Monetary Policy and the Deflation Problem,"
NBER Working Papers
10878, National Bureau of Economic Research, Inc.
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- Kathryn Dominguez & Jeffrey A. Frankel, 1990. "Does Foreign Exchange Intervention Work?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 16.
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