Abstract
This chapter discusses effects of unconventional monetary policy on bank lending in Japan and argues that the Bank of Japan’s unconventional monetary policy increased bank loan supply by suppressing the long-term interest rates of Japanese government bonds (JGBs). When the interest rates of JGBs decline, banks substitute loans to firms for JGBs in their asset portfolios. The chapter also discusses the desirability of the 2% inflation target of from a theoretical point of view.
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Notes
- 1.
Note that the original statement is in Japanese; the English translation here follows Shirai (2013)
- 2.
See Fig. 2 of Coibion et al. (2012).
- 3.
In standard textbooks, superneutrality is explained in terms of the growth rate of the money supply. Super-neutrality holds if a change in the growth rate of the money supply changes only inflation and not real activities.
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Aoki, K. (2021). Effects of Unconventional Monetary Policy and Inflation Target. In: Monetary Policies in the Age of Uncertainty. SpringerBriefs in Economics(). Springer, Singapore. https://doi.org/10.1007/978-981-16-4146-6_1
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DOI: https://doi.org/10.1007/978-981-16-4146-6_1
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