Price Stability and Japanese Monetary Policy
Robert L. Hetzel
Federal Reserve Banks - Federal Reserve Bank of Richmond
February 19, 2004
FRB Richmond Working Paper No. 04-01
For most of the time since 1995, the Japanese price level has declined. Since early 1999, short-term interest rates have mostly remained near zero. Also, starting in 2001, the excess reserves held by banks have risen dramatically. Many observers have concluded that central banks are powerless to end deflation when short-term interest rates are near zero. This paper argues that such a pessimistic conclusion is unwarranted.
Number of Pages in PDF File: 47
Keywords: Japanese monetary policy, Bank of Japan, deflation, liquidity trap
JEL Classification: E5
Date posted: December 4, 2012
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