Experiencing Deflation or Disinflation around the World
[T]he author would like to again emphasize the importance of the fact that Japan’s economy is confronting zero interest rates … Based on this, in a situation where there is little room for a further decline in short-term interest rates, the effects of monetary easing will necessarily be limited. The fact that economic activity has not been stimulated despite an aggressive increase in reserves since March 2001 seems to be consistent with what such standard theory predicts. This kind of conclusion may frustrate readers who seek to find a monetary policy solution. Some may argue that, without other options, the Bank of Japan should try unconventional monetary policy even if the effects are not certain. However, given the difficulty of the problems facing Japan’s economy, before jumping to such conclusion, economists are expected to present sober analysis of the situation fully utilizing all the information and knowledge available.1
KeywordsInterest Rate Unemployment Rate Monetary Policy Central Bank Euro Area
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