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Monetary "targeting" in Japan and the U.S.: which is more accurate?


  • Michael M. Hutchison
  • John P. Judd


This paper examines the issue of whether differences in money targeting or base-drift procedures between Japan and the U.S. are significant contributing factors to Japan's superior macroeconomic performance over the last decade, and concludes that these procedures probably are not important factors. ; We compare Bank of Japan (BoJ) money growth projections with Federal Reserve money targets. We show that BoJ projections are not comparable to annual money targets set by the Fed. We construct from past Records of Policy Actions of Federal Open Market Committee meetings a data set of Fed quarterly money growth projections, which is comparable to BoJ money projections. Projection errors for money growth in Japan are only slightly smaller than for the U.S. Moreover, BoJ procedures effectively allow full base drift each quarter, while the Fed in most instances has allowed base drift only once per year.

Suggested Citation

  • Michael M. Hutchison & John P. Judd, 1987. "Monetary "targeting" in Japan and the U.S.: which is more accurate?," Working Papers in Applied Economic Theory 87-10, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfap:87-10

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