Japanese Monetary Policy and Deflation
Economic Quarterly
Summer 2003
The price level is falling in Japan. To end deflation, the Bank of Japan should move to a strategy of actively creating bank reserves and money in response to price level deviations from an explicit target. Under the current policy, bank reserves are demand-determined rather than supply-determined. Current procedures limit reserves creation to the amount demanded at a zero short-term interest rate.
Subscribe to Economic Quarterly
Receive an email notification when Economic Quarterly is posted online:
Contact Us