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Japan's Monetary Policy Transition, 1955-2004

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  • Naoyuki Yoshino
  • James R. Rhodes

Abstract

This paper surveys the postwar evolution of Bank of Japan (BOJ) monetary policy. Using both qualitative and quantitative data, we describe the changes in the money supply process in response to changing institutional constraints. We focus on the transition from quantitative to qualitative control mechanisms, illuminating, in particular, the important role of the BOJ=s lending guidance (Awindow guidance@) in the early periods and financial liberalization in subsequent periods. Monetary policy reaction functions are estimated and used to identify major changes in policy instruments, targets, and indicators. We analyze the historical behavior of the money multipliers and their components, highlighting reasons for their current depressed state. We conclude with comments on current challenges facing the monetary authorities.

Suggested Citation

  • Naoyuki Yoshino & James R. Rhodes, 2004. "Japan's Monetary Policy Transition, 1955-2004," Econometric Society 2004 Far Eastern Meetings 725, Econometric Society.
    • Handle: RePEc:ecm:feam04:725
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    1. Policy Planning Office, 2002. "How Should the Recent Increase in Japan's Monetary Base Be Understood?," Bank of Japan Research Papers 2002-09-05, Bank of Japan.
    2. Singleton, Kenneth J. (ed.), 1993. "Japanese Monetary Policy," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226760667, April.
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    4. Hiroshi Yoshikawa, 1993. "Monetary Policy and the Real Economy in Japan," NBER Chapters, in: Japanese Monetary Policy, pages 121-159, National Bureau of Economic Research, Inc.
    5. Kenneth Singleton, 1993. "Japanese Monetary Policy," NBER Books, National Bureau of Economic Research, Inc, number sing93-1.
    6. Kumiharu Shigehara, 1991. "Japan's Experience with Use of Monetary Policy and the Process of Liberalization," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 9(1), pages 1-21, March.
    7. James R. Rhodes & Naoyuki Yoshino, 1999. "Window Guidance By The Bank Of Japan: Was Lending Controlled?," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 166-176, April.
    8. Kazuo Ueda, 1993. "A Comparative Perspective on Japanese Monetary Policy: Short-Run Monetary Control and the Transmission Mechanism," NBER Chapters, in: Japanese Monetary Policy, pages 7-30, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Monetary policy; Bank of Japan;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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