Central Bank Balance Sheet Expansion: Japan's Experience

28 Pages Posted: 4 Jan 2013

See all articles by Kazumasa Iwata

Kazumasa Iwata

Independent

Shinji Takagi

Osaka University - Graduate School of Economics

Date Written: October 1, 2012

Abstract

The expansion of central bank balance sheets and the changes in their composition during financial crises have been effective in rectifying market malfunction and stabilising financial markets in Japan and elsewhere. However, the unconventional policy measures are accompanied by costs, as they are likely to lead to misallocation of resources and to the risk of looser fiscal discipline. An additional possibility is the adverse international transmission of monetary expansion through changes in exchange rates and terms of trade, depending on the price setting behaviour of exporting firms. Even more harmful is the effect on emerging economies when there is financial market disruption in the financial centres.

Full publication: Are Central Bank Balance Sheets in Asia Too Large?

Keywords: Central bank balance sheets, international transmission, financial stability

JEL Classification: E58, F42

Suggested Citation

Iwata, Kazumasa and Takagi, Shinji, Central Bank Balance Sheet Expansion: Japan's Experience (October 1, 2012). BIS Paper No. 66g, Available at SSRN: https://ssrn.com/abstract=2185369

Shinji Takagi

Osaka University - Graduate School of Economics ( email )

1-7 Machikaneyama
Toyonaka, Osaka, 560-0043
Japan

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
137
Abstract Views
788
rank
251,844
PlumX Metrics