TY - JOUR
T1 - Effectiveness of the Easing of Monetary Policy in the Japanese Economy, incorporating Energy Prices
AU - Yoshino, Naoyuki
AU - Taghizadeh-Hesary, Farhad
N1 - Funding Information:
Naoyuki YOSHINO is Dean of the Asian Development Bank Institute (ADBI) and Professor Emeritus at Keio University, Tokyo, Japan. He obtained his PhD from Johns Hopkins University (United States) in 1979. He has also been an assistant professor at the State University of New York at Buffalo and an economics professor at Keio University. He was named Director of the Japan Financial Services Agency’s (FSA) Financial Research Centre (FSA Institute) in 2004 and is now its Chief Advisor. Additionally, he has been a Board Member of the Deposit Insurance Corporation of Japan and President of the Financial System Council of the Government of Japan. He was named one of the World Top 100 Educators in 2009. He obtained honorary doctorates from the University of Gothenburg (Sweden) in 2004 and Martin Luther University of Halle-Wittenberg (Germany) in 2013. He also received the Fukuzawa Award in 2013 for his contribution to research on economic policy.
Publisher Copyright:
© 2015 City University of Hong Kong.
PY - 2015/5/4
Y1 - 2015/5/4
N2 - Japan has reached the limits of conventional macroeconomic policies. In order to overcome deflation and achieve sustainable economic growth, the Bank of Japan (BOJ) recently set an inflation target of 2 per cent and implemented an aggressive monetary policy so this target could be achieved as soon as possible. Although prices started to rise after the BOJ implemented monetary easing, this may have been for other reasons, such as higher energy prices as a result of the depreciated Japanese yen. This paper shows that quantitative easing may not be able to stimulate the Japanese economy. Aggregate demand, which includes private investment, did not increase significantly in Japan with lower interest rates. Private investment displays this unconventional behaviour because of the uncertainty about the future and because Japan's population is ageing. The paper concludes that the remedy for Japan's economic policy is not to be found in its monetary policy.
AB - Japan has reached the limits of conventional macroeconomic policies. In order to overcome deflation and achieve sustainable economic growth, the Bank of Japan (BOJ) recently set an inflation target of 2 per cent and implemented an aggressive monetary policy so this target could be achieved as soon as possible. Although prices started to rise after the BOJ implemented monetary easing, this may have been for other reasons, such as higher energy prices as a result of the depreciated Japanese yen. This paper shows that quantitative easing may not be able to stimulate the Japanese economy. Aggregate demand, which includes private investment, did not increase significantly in Japan with lower interest rates. Private investment displays this unconventional behaviour because of the uncertainty about the future and because Japan's population is ageing. The paper concludes that the remedy for Japan's economic policy is not to be found in its monetary policy.
KW - Abenomics
KW - Japanese economy
KW - inflation targeting
KW - monetary easing
KW - oil prices
KW - zero interest rate policy
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U2 - 10.1080/15339114.2015.1059059
DO - 10.1080/15339114.2015.1059059
M3 - Article
AN - SCOPUS:84941780424
SN - 1533-9114
VL - 14
SP - 227
EP - 248
JO - Journal of Comparative Asian Development
JF - Journal of Comparative Asian Development
IS - 2
ER -
