Japanese Monetary Policy -- A Comparative Analysis
Economic Review, Vol. 72, No. 6, November/December 1986, pp. 12-24
13 Pages Posted: 25 Oct 2012
Abstract
This paper presents an analysis of Japanese monetary policy, and concentrates on the operating mechanisms used by the Bank of Japan in conducting policy. References are made to U.S. monetary policy in an attempt to highlight the major similarities and differences between the respective monetary policies. The major conclusion is that although there are some interesting differences, the two central banks’ daily operating procedures are very similar. Both monetary authorities basically use the interbank market interest rate as their policy instrument. Therefore, any major differences in Japanese and U.S. macroeconomic performance that can be attributed to the behavior of the two monetary authorities are not due to dissimilar operating procedures. Profitable research attempting to discover reasons for differences in monetary policy should concentrate on understanding the political nature of the monetary institutions and the political constraints that are associated with each country’s institutional framework. Such considerations, however, are far beyond the scope of this paper, which focuses chiefly on comparable operating procedures and macroeconomic performance.
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