47 Pages Posted: 4 Dec 2012
Date Written: February 19, 2004
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.
Keywords: Japanese monetary policy, Bank of Japan, deflation, liquidity trap
JEL Classification: E5
Suggested Citation: Suggested Citation
Hetzel, Robert L., Price Stability and Japanese Monetary Policy (February 19, 2004). FRB Richmond Working Paper No. 04-01. Available at SSRN: https://ssrn.com/abstract=2184952 or http://dx.doi.org/10.2139/ssrn.2184952