Impact of the Kuroda Bazooka on Japanese households’ borrowing intentions

28 Pages Posted: 12 Apr 2021 Last revised: 11 Apr 2022

Date Written: March 29, 2021

Abstract

This study examines the impact of the monetary easing policy announced by the Bank of Japan on October 31, 2014 on households’ willingness to borrow. This policy, known as the Kuroda Bazooka, was not anticipated by the private sector; therefore, it can be regarded as an exogenous shock. To estimate the effects of the Kuroda Bazooka, the study uses interrupted time-series analysis, a technique often used in medicine but not yet widely used in economics. The analysis of the data before and after the shock shows that the Kuroda Bazooka increased household borrowing intention by about 10%. This result suggests that even though there was not much actual change in households’ aggregated borrowing, there was a change in their intention to borrow. Thus, a monetary policy that merely changes expectations may not be effective.

Keywords: Kuroda Bazooka; Haruhiko Kuroda; households’ willingness to borrow; Bank of Japan

JEL Classification: E52, E58, G51

Suggested Citation

Gunji, Hiroshi, Impact of the Kuroda Bazooka on Japanese households’ borrowing intentions (March 29, 2021). Available at SSRN: https://ssrn.com/abstract=3823830 or http://dx.doi.org/10.2139/ssrn.3823830

Hiroshi Gunji (Contact Author)

Daito Bunka University ( email )

1-9-1 Takashimadaira
Itabashi-ku, Tokyo 175-8571
Japan

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