Skip navigation
Skip navigation

Policy regime change against chronic deflation? Policy option under a long-term liquidity trap

Fujiwara, Ippei; Nakazono, Yoshiyuki; Ueda, Kozo

Description

The policy package known as Abenomics appears to have influenced the Japanese economy drastically, in particular, in the financial markets. In this paper, focusing on the aggressive monetary easing of Abenomics, the first arrow, we evaluate its role in guiding public perceptions on monetary policy stance through the management of expectations. In order to end chronic deflation, such as that which Japan has been suffering over the last two decades, policy regime change must be perceived by...[Show more]

dc.contributor.authorFujiwara, Ippei
dc.contributor.authorNakazono, Yoshiyuki
dc.contributor.authorUeda, Kozo
dc.date.accessioned2016-02-24T22:41:13Z
dc.identifier.issn0889-1583
dc.identifier.urihttp://hdl.handle.net/1885/98612
dc.description.abstractThe policy package known as Abenomics appears to have influenced the Japanese economy drastically, in particular, in the financial markets. In this paper, focusing on the aggressive monetary easing of Abenomics, the first arrow, we evaluate its role in guiding public perceptions on monetary policy stance through the management of expectations. In order to end chronic deflation, such as that which Japan has been suffering over the last two decades, policy regime change must be perceived by economic agents. Analysis using the QUICK survey system (QSS) monthly survey data shows that monetary policy reaction to inflation rates has been in a declining trend since the mid 2000s, implying intensified forward guidance well before Abenomics. However, Japan seems to have moved closer to a long-term liquidity trap, where even long-term bond yields are constrained by the zero lower bound. Consequently, no sizable difference in perceptions has been found before and after the introduction of Abenomics. Estimated changes in perceptions are not abrupt enough to satisfy "Sargent's (1982) criteria for regime change" termed by Eggertsson (2008). This poses a serious challenge to central banks: what is an effective policy option left under the long-term liquidity trap?
dc.publisherAcademic Press
dc.sourceJournal of the Japanese and International Economies
dc.titlePolicy regime change against chronic deflation? Policy option under a long-term liquidity trap
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume37
dc.date.issued2015
local.identifier.absfor140102 - Macroeconomic Theory
local.identifier.ariespublicationU3488905xPUB6410
local.type.statusPublished Version
local.contributor.affiliationFujiwara, Ippei, College of Asia and the Pacific, ANU
local.contributor.affiliationNakazono, Yoshiyuki, Yokohama City University
local.contributor.affiliationUeda, Kozo, Waseda University
local.description.embargo2037-12-31
local.bibliographicCitation.startpage59
local.bibliographicCitation.lastpage81
local.identifier.doi10.1016/j.jjie.2015.05.005
dc.date.updated2016-02-24T10:10:33Z
local.identifier.scopusID2-s2.0-84938420726
CollectionsANU Research Publications

Download

File Description SizeFormat Image
01_Fujiwara_Policy_regime_change_against_2015.pdf1.59 MBAdobe PDF    Request a copy


Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.

Updated:  19 May 2020/ Responsible Officer:  University Librarian/ Page Contact:  Library Systems & Web Coordinator