Monetary Policy in Japan, Germany and the United States: Does One Size Fit All?

43 Pages Posted: 27 Feb 1998 Last revised: 26 Aug 2022

See all articles by Menzie David Chinn

Menzie David Chinn

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics; National Bureau of Economic Research (NBER)

Michael P. Dooley

University of California at Santa Cruz; National Bureau of Economic Research (NBER)

Date Written: July 1997

Abstract

We study the post-war evidence for Japan to see if the same specification for both the economy and the monetary policy rule is useful for understanding Japan's economy and monetary policy. A recurrent theme in the literature on Japanese monetary policy is that there are significant differences in both the policy procedures and objectives as compared to other industrial countries. In this paper we propose an out of sample' test of a set of restrictions on a vector autoregression employed by Clarida and Gertler (1997) in their analysis of the Bundesbank's behavior. Our interpretation of the evidence is that, with minor adjustments, the same specification provides a useful framework for understanding monetary policy in Japan. Perhaps the most interesting finding is that the Bank of Japan appears to react to inflation over longer forecast horizons as compared to other central banks.

Suggested Citation

Chinn, Menzie David and Dooley, Michael P., Monetary Policy in Japan, Germany and the United States: Does One Size Fit All? (July 1997). NBER Working Paper No. w6092, Available at SSRN: https://ssrn.com/abstract=56138

Menzie David Chinn (Contact Author)

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics ( email )

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Michael P. Dooley

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