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Trend inflation and monetary policy regimes in Japan

Date

2018-12-21

Authors

Okimoto, Tatsuyoshi

Journal Title

Journal ISSN

Volume Title

Publisher

Pergamon Press

Abstract

This paper examines the dynamics of trend inflation in Japan over the last three decades based on the smooth transition Phillips curve model. We find that there is a strong connection between the trend inflation and monetary policy regimes. The results also suggest that the introduction of the inflation targeting policy and quantitative and qualitative easing in the beginning of 2013 successfully escaped from the deflationary regime, but were not enough to achieve the 2% inflation target. Finally, our results indicate the significance of exchange rates in explaining the recent fluctuations of inflation and the importance of oil and stock prices in maintaining the positive trend inflation regime.

Description

Keywords

Phillips curve, Inflation targeting, Quantitative and qualitative easing, Smooth transition model

Citation

Source

Journal of International Money and Finance

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

DOI

10.1016/j.jimonfin.2018.12.008

Restricted until

2037-12-31