IDEAS home Printed from https://ideas.repec.org/a/mes/jpneco/v36y2009i1p48-105.html
   My bibliography  Save this article

Effectiveness and Transmission Mechanisms of Japan's Quantitative Monetary Easing Policy

Author

Listed:
  • Yutaka Harada
  • Minoru Masujima

Abstract

This study analyzes the overall economic impact and transmission mechanisms of Japan's quantitative monetary easing policy (QMEP) based on Honda, Kuroki, and Tachibana (2007). A vector auto regression (VAR) model analysis has led to the following four observations. First, an increase of base money raises aggregate output. Second, the impact of the QMEP is primarily transmitted through the channels of asset prices and bank balance sheets. Not verified are the transmission channels of the bank's information production, exchange rate, or the policy duration effect. These findings confirm the results of Honda, Kuroki, and Tachibana (2007). but the identification of bank balance sheets as a transmission channel represents a new finding. Additionally, these channels were reaffirmed even when subject to more rigorous analysis. Third, the QMEP raises interest rates in the long term, which raises doubt about the validity of the policy duration effect and, in particular, the signaling effect. Fourth, even during the period when a traditional interest rate policy was being implemented, base money had an effect on aggregate output. These results suggest that Japan's monetary policy has been an effective means of easing Japan's prolonged economic downturn.

Suggested Citation

  • Yutaka Harada & Minoru Masujima, 2009. "Effectiveness and Transmission Mechanisms of Japan's Quantitative Monetary Easing Policy," Japanese Economy, Taylor & Francis Journals, vol. 36(1), pages 48-105.
    • Handle: RePEc:mes:jpneco:v:36:y:2009:i:1:p:48-105
    DOI: 10.2753/JES1097-203X360103
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2753/JES1097-203X360103
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.2753/JES1097-203X360103?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kansho Piotr Otsubo, 2018. "How Does Unconventional Monetary Policy Influence the Economy in Japan?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(3), pages 308-330, March.
    2. Bhanupong Nidhiprabha, 2016. "Impacts of Quantitative Monetary Easing Policy in the United States and Japan on the Thai Economy," The Developing Economies, Institute of Developing Economies, vol. 54(1), pages 80-102, March.
    3. Fatouh, Mahmoud & Markose, Sheri & Giansante, Simone, 2021. "The impact of quantitative easing on UK bank lending: Why banks do not lend to businesses?," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 928-953.
    4. Harimaya, Kozo & Jinushi, Toshiki, 2023. "The effects of quantitative easing policy on bank lending: Evidence from Japanese regional banks," Japan and the World Economy, Elsevier, vol. 67(C).
    5. Lau, Wee-Yeap & Yip, Tien-Ming, 2020. "How do monetary transmission channels influence inflation in the short and long run? Evidence from the QQE regime in Japan," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    6. Kansho Piotr Otsubo, 2018. "The Effects of Fiscal and Monetary Policies in Japan: What Combination of Policies Should Be Used?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 9(01n02), pages 1-25, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:jpneco:v:36:y:2009:i:1:p:48-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MJES19 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.