One main feature of the macroeconomic performance of Japan since the shift to floating exchange rates has been the reduction in the variability of inflation and growth. Figure 3.1 outlines this particular feature very clearly. This figure shows the growth rate of money stock, together with that of nominal and real GNP over the years 1956–88, in terms of quarterly data vis-à-vis the same quarter of the previous year. Because the Bank of Japan switched to a policy of focusing attention on M2 + CDs in 1975, this indicator of the money stock is used in the figure. The following aspects of macro performance may be read from it.
KeywordsMonetary Policy Money Supply Purchase Power Parity Monetary Aggregate Money Growth
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