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Price Stability and Japanese Monetary Policy

47 Pages Posted: 4 Dec 2012  

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: February 19, 2004

Abstract

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

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

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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