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A Reassessment of Japan's Monetary Policy during the Great Depression: The Constraints and Remedies

Author

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  • Masato Shizume

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

Temin [1989] and Eichengreen [1992] argue that monetary policy played a key role in each country's economic performance during the Great Depression, and that some European policymakers hesitated to pursue an expansionary monetary policy even after departing from gold. Why did these policymakers not pursue the opportunities they were able to pursue to the fullest extent? This study explores this issue by looking at the case of Japan, focusing on the constraints it faced and the remedies available to it as a small, open economy. This study explores the relationship between interest rates in Japan and in the major international financial centers, using a new series of representative long-term interest rates and narratives. This study reveals that Japan imposed a restrictive monetary policy on itself even after departing from the gold standard. Japan did so because it needed to maintain its ties both with its trading partners and with the international financial markets.

Suggested Citation

  • Masato Shizume, 2007. "A Reassessment of Japan's Monetary Policy during the Great Depression: The Constraints and Remedies," Discussion Paper Series 208, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:208
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp208.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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