TY - JOUR
T1 - Empirical analysis of the exchange rate channel in Japan
AU - Nagayasu, Jun
N1 - Funding Information:
I would like to thank the editor and anonymous referees for comments, and for suggestions on an earlier version of this paper Hiroshi Fujiki, Taiji Harashima, Shinichi Nishiyama, Kunio Okina, and Shigenori Shiratsuka. The earlier version was presented at the Institute for Monetary and Economic Studies, the Bank of Japan (2004). However, all errors and omissions are my responsibility. The majority of this paper was written when the author was an IMF economist (2003). This research has been supported in part by Yamada Research Foundation (Yamada Gakujutsu Shourei Kikin).
PY - 2007/10
Y1 - 2007/10
N2 - This paper analyzes the significance of the exchange rate channel, one of the transmission mechanisms of monetary policy. It is important to evaluate this channel for Japan because yen depreciation has been proposed as a policy to move the economy out of a liquidity trap. Our results suggest that, in the past, monetary expansion resulted in yen depreciation in the long- and short-run. However, there is no evidence to support the view that yen depreciation facilitated economic growth. Therefore, we conclude that use of the exchange rate as a mechanism to boost the real economy was, in our sample period at least, premature.
AB - This paper analyzes the significance of the exchange rate channel, one of the transmission mechanisms of monetary policy. It is important to evaluate this channel for Japan because yen depreciation has been proposed as a policy to move the economy out of a liquidity trap. Our results suggest that, in the past, monetary expansion resulted in yen depreciation in the long- and short-run. However, there is no evidence to support the view that yen depreciation facilitated economic growth. Therefore, we conclude that use of the exchange rate as a mechanism to boost the real economy was, in our sample period at least, premature.
KW - Exchange rate channel
KW - Japanese monetary policy
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U2 - 10.1016/j.jimonfin.2007.05.002
DO - 10.1016/j.jimonfin.2007.05.002
M3 - Article
AN - SCOPUS:34447570831
VL - 26
SP - 887
EP - 904
JO - Journal of International Money and Finance
JF - Journal of International Money and Finance
SN - 0261-5606
IS - 6
ER -
