IDEAS home Printed from https://ideas.repec.org/p/osk/wpaper/1118.html
   My bibliography  Save this paper

Quantitative Easing in Japan from 2001 to 2006 and the World Financial Crisis

Author

Listed:
  • Yuzo Honda

    (Kansai University)

  • Minoru Tachibana

    (Osaka Prefecture University)

Abstract

The Bank of Japan adopted the Quantitative Easing (QE) Policy from March 2001 to March 2006. This paper investigates whether or not this QE had an effect in stimulating real economy in Japan. The identification of policy effect in the above Japanese case enables us to evaluate indirectly the effectiveness of the non-traditional monetary policy employed by US Federal Reserve Board (FRB) or the Bank of England (BOE) just after the collapse of Lehman Brothers. We extend vector autoregression analysis by Honda, Kuroki, and Tachibana (2007, 2010; HKT), including monthly samples before and after the period of QE, but at the same time fully exploiting prior information on the structural change of operating targets of monetary policy from call rate to bank reserve during the period of QE. There are two main results. First, this paper reconfirms our qualitative findings in HKT. That is, increases in bank reserve balances boost stock prices first, and then industrial production. Secondly, an increase in bank reserve balances by 1 trillion yen led to the rise of stock prices by the range of 0.2% to 0.9%, and to the increase of industrial production by the range of 0.03% to 0.18%. Finally, FRB called their policy after the Lehman shock gcredit easing h policy, but their policy includes both aspects of credit easing and QE. The results of the present paper suggest that even the QE aspect alone of the non-traditional monetary policy by FRB or BOE should have significant stimulating policy effects.

Suggested Citation

  • Yuzo Honda & Minoru Tachibana, 2011. "Quantitative Easing in Japan from 2001 to 2006 and the World Financial Crisis," Discussion Papers in Economics and Business 11-18, Osaka University, Graduate School of Economics.
  • Handle: RePEc:osk:wpaper:1118
    as

    Download full text from publisher

    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1118.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lau, Wee-Yeap & Yip, Tien-Ming, 2020. "How do monetary transmission channels influence inflation in the short and long run? Evidence from the QQE regime in Japan," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    2. Kansho Piotr Otsubo, 2018. "The Effects of Fiscal and Monetary Policies in Japan: What Combination of Policies Should Be Used?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 9(01n02), pages 1-25, February.

    More about this item

    Keywords

    Quantitative easing; Money injection; Portfolio rebalancing; Stock price channel; Vector autoregression;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osk:wpaper:1118. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The Economic Society of Osaka University (email available below). General contact details of provider: https://edirc.repec.org/data/feosujp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.