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La Politica Monetaria En Japon: Lecciones A Extraer En La Comparacion Con La De Los Eeuu


  • Alicia García Herrero

    (Banco de España)

  • César Martín Machuca

    (Banco de España)


Japan’s experience shows that very negative circumstances are required for a country to suffer from protracted deflation. The comparison of Japan’s developments in the last few years with those of the US points to large differences, which suggest that the risk of deflation in the US is low. However, the analysis of the deflation spiral in Japan could be useful to draw lessons for other countries. The first lesson to draw is that deflation is very costly and that it is difficult to anticipate. Authorities should, thus, react aggressively to avoid zero interest rates, since reaching the zero bound drastically reduces the effectiveness of monetary policy. Before reaching the zero-bound, it seems useful to adopt an inflation targeting regime, perhaps accompanied by an explicit compromise of maintaining interest rates at very low levels for a predetermined period. When zero bound is reached, the authorities still have policy instruments to fight against deflation, among them heterodox monetary measures, expansionary fiscal policy and/or substantial exchange rate depreciation. The case of Japan points to the large potential costs of these options, in terms of the central bank’s balance sheet, the sustainability of the fiscal accounts and, potentially, the stability of the international monetary system. However, Japan’s protracted stagnation and deflation is bound to be more costly.

Suggested Citation

  • Alicia García Herrero & César Martín Machuca, 2003. "La Politica Monetaria En Japon: Lecciones A Extraer En La Comparacion Con La De Los Eeuu," Macroeconomics 0311005, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0311005 Note: Type of Document - pdf; prepared on WIN 2000; to print on HP;

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    References listed on IDEAS

    1. Runkle, David E, 1987. "Vector Autoregressions and Reality," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 437-442, October.
    2. Jonathan H. Wright, 2000. "Exact confidence intervals for impulse responses in a Gaussian vector autoregression," International Finance Discussion Papers 682, Board of Governors of the Federal Reserve System (U.S.).
    3. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-144, January.
    4. Runkle, David E, 1987. "Vector Autoregressions and Reality: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 454-454, October.
    5. David E. Runkle, 1987. "Vector autoregressions and reality," Staff Report 107, Federal Reserve Bank of Minneapolis.
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    More about this item


    Japón; EEUU; política monetaria; deflación;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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