Japanese Monetary Policy, 1991-2001

FRB Richmond Economic Quarterly, Vol. 89, No. 1, Winter 2003, pp. 1-31

31 Pages Posted: 5 Dec 2012

See all articles by Bennett T. McCallum

Bennett T. McCallum

Carnegie Mellon University - David A. Tepper School of Business; National Bureau of Economic Research (NBER)

Date Written: 2003

Abstract

Analysis suggests that Bank of Japan (BOJ) policy has been insufficiently expansionary for over a decade; that the BOJ has faced special problems because of the zero lower bound on interest rates; and that the most promising approach would entail rapid base money growth effected primarily by purchases of foreign exchange. Simulation analysis with a calibrated optimizing model indicates that such a policy would probably increase Japan's net imports. The BOJ Law presents some difficulties, but these should be surmountable.

Suggested Citation

McCallum, Bennett T., Japanese Monetary Policy, 1991-2001 (2003). FRB Richmond Economic Quarterly, Vol. 89, No. 1, Winter 2003, pp. 1-31, Available at SSRN: https://ssrn.com/abstract=2184941

Bennett T. McCallum (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

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