Monetary Policymaking, 1998–2012

2018 ◽  
pp. 134-160
Author(s):  
Gene Park ◽  
Saori N. Katada ◽  
Giacomo Chiozza ◽  
Yoshiko Kojo
Keyword(s):  
Decision Making ◽  
Monetary Policy ◽  
Interest Rate ◽  
Global Financial Crisis ◽  
Interest Rate Policy ◽  
Forward Guidance ◽  
Policy Ideas ◽  
Zero Interest Rate Policy ◽  
Rate Policy ◽  
The Global Financial Crisis

This chapter looks at three case studies of the Bank of Japan's (BOJ) monetary policy to illustrate how these policy ideas influenced BOJ decision making: the decision to implement and then lift the zero interest rate policy (ZIRP) (1998–2000); the first quantitative easing (QE) policy (2001–6); and the policies implemented in response to the global financial crisis and then Japan's “3–11” triple disaster—the massive earthquake, tsunami, and nuclear meltdown that occurred on March 11, 2011. During these fifteen years, the BOJ's worldview made it slow to tackle deflation head-on and cautious in its reflationary measures. The BOJ Policy Board at various times did concede to outside pressure to use unorthodox monetary measures such as forward guidance or QE. It did so reluctantly, however. When afforded room to maneuver, the Policy Board was ready to retreat quickly from monetary easing, in some cases even before the economy was fully out of deflation.

scholarly journals AN ESTIMATED DSGE MODEL WITH A DEFLATION STEADY STATE

2018 ◽  
Vol 24 (5) ◽  
pp. 1151-1185 ◽  
Author(s):  
Yasuo Hirose
Keyword(s):  
Monetary Policy ◽  
Steady State ◽  
Interest Rate ◽  
Global Financial Crisis ◽  
Japanese Economy ◽  
Dsge Model ◽  
Interest Rate Policy ◽  
Output Fluctuations ◽  
Rate Policy ◽  
The Global Financial Crisis

Benhabib et al. [(2001) Journal of Economic Theory 96, 40–69] argue that there exists a deflation steady state when the zero lower bound on the nominal interest rate is considered in a Taylor-type monetary policy rule. This paper estimates a medium-scale DSGE model with a deflation steady state for the Japanese economy during the period from 1999 to 2013, when the Bank of Japan conducted a zero interest rate policy and the inflation rate was almost always negative. Although the model exhibits equilibrium indeterminacy around the deflation steady state, a set of specific equilibria is selected by Bayesian methods. According to the estimated model, positive shocks to households’ preferences and wage markup, and a negative shock to monetary policy do not necessarily have an inflationary effect, in contrast to a standard model with a targeted-inflation steady state. An economy in the deflation equilibrium could experience unexpected volatility because of sunspot fluctuations, but it turns out that sunspot shocks have a limited effect on Japan’s output fluctuations and rather contribute to stabilizing the economy after the global financial crisis.

scholarly journals Negative Interest Rate Risk. Atavism or Normalization of Central Banks’ Monetary Policy

2019 ◽  
Vol 3 (342) ◽  
pp. 89-116
Author(s):  
Irena Pyka ◽  
Aleksandra Nocoń
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banks ◽  
Interest Rate Risk ◽  
Interest Rate Policy ◽  
Rate Policy ◽  
Negative Interest Rate Policy

In the face of the global financial crisis, central banks have used unconventional monetary policy instruments. Firstly, they implemented the interest rate policy, lowering base interest rates to a very low (almost zero) level. However, in the following years they did not undertake normalizing activities. The macroeconomic environment required further initiatives. For the first time in history, central banks have adopted Negative Interest Rate Policy (NIRP). The main aim of the study is to explore the risk accompanying the negative interest rate policy, aiming at identifying channels and consequences of its impact on the economy. The study verifies the research hypothesis stating that the risk of negative interest rates, so far unrecognized in Theory of Interest Rate, is a consequence of low effectiveness of monetary policy normalization and may adopt systemic nature, by influencing – through different channels – the financial stability and growth dynamics of the modern world economy.

scholarly journals An Investigation on the Monetary Policy and Short-term Interest Rates in Japan

2011 ◽  
Vol 1 (1) ◽  
pp. 64 ◽  
Author(s):  
Chikashi TSUJI
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Taylor Rule ◽  
Consumer Price Index ◽  
Call Rate ◽  
Interest Rate Policy ◽  
Zero Interest Rate Policy ◽  
The Us ◽  
Rate Policy

We explore the intertemporal linkage between call rate changes, consumer price index (CPI) changes, and real gross domestic product (GDP) changes in Japan based on the Taylor rule of monetary policy. In our analysis, we consider two sample periods, namely, the former is before zero-interest rate policy and the latter is after it. According to our empirical results, first, we find that the relations between call rate changes and GDP changes and those between call rate changes and CPI changes are weak before zero-interest rate policy. Second, we also find that after zero-interest rate policy, mutual intertemporal relations between call rate changes and GDP changes are seen as the US Taylor rule suggests, although the linkage between call rate changes and CPI changes is not seen. Hence after zero-interest rate policy, regarding call rates and GDP, the relations suggested by US Taylor rule are found in Japan.

scholarly journals Comparison of the Approach of the Czech National Bank and the European Central Bank to the Effects of the Global Financial Crisis

2021 ◽  
Vol 10 (2) ◽  
pp. 18-46
Author(s):  
Andrea Cecrdlova
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Crisis ◽  
Central Bank ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Central Banks ◽  
European Central ◽  
National Bank ◽  
The Global Financial Crisis

The latest global crisis, which fully erupted in 2008, can have a significant impact on central banks credibility in the long run. During the last crisis, monetary authorities encountered zero interest rate levels and, as a result, started to use non-standard monetary policy instruments. The Czech National Bank decided to use a less standard instrument in November 2013, when it started to intervene on the foreign exchange market in order to keep the Czech currency at level 27 CZK / EUR. However, the European Central Bank also adopted a non-standard instrument, when chose a path of quantitative easing in 2015 in order to support the euro area economy by purchasing financial assets. The question remains whether the approach of Czech National Bank or the approach of European Central Bank in the crisis and post-crisis period was a more appropriate alternative. With the passage of time from the global financial crisis, it is already possible to compare the approaches of these two central banks and at least partially assess what approach was more appropriate under the given conditions. When comparing the central banks approaches to the crisis, the Czech National Bank was better, both in terms of the rate of interest rate cuts and the resulting inflation with regard to the choice of a non-standard monetary policy instrument. The recent financial crisis has revealed the application of moral hazard in practice, both on behalf of the European Central Bank and the Czech National Bank, which may have a significant impact on their credibility and independence in the coming years.

Monetary Policy's Influence on Real Estate Price in China: An Analysis Based on VAR Model

2013 ◽  
Vol 850-851 ◽  
pp. 1003-1007
Author(s):  
Xiong Song He ◽  
Guo Lin Deng
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Real Estate ◽  
Money Supply ◽  
Var Model ◽  
Response Analysis ◽  
Interest Rate Policy ◽  
The Real Estate ◽  
Real Estate Price ◽  
Rate Policy

Monetary policy has a significant effect on real estate price, and monetary policymakers need to have quick response. Based on the assumptions that monetary policy and real estate price influence each other and variables affect one another with a lag, A VAR model is designed and modified. Through impulse-response analysis and variance analysis, the influence of money supply and that of interest rate on real estate price are tested and compared. We found that: both money supply and interest rate could affect the real estate price; interest rate has a bigger influence that money supply does; as time goes on, the influence of money supply changes little, but that of interest rate enhances; interest rate policy is not easy to control and it will lead to a fluctuation of economy and the fluctuation may enhance, money supply is a better method to regulate real estate industry instead.

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