Abstract
This brief chapter investigates postwar Japanese monetary policies through the lens of the Taylor equation and the associated Taylor rule. We break from previous studies in extending the investigation back to the early postwar period and by examining the stability of the Taylor specification in various subperiods. In general, we find little support for the Taylor equation in the Japan case. A possible exception is the period from 1980–1997, but this was a period of the “bubble economy” and subsequent “Lost Decade.” We see this as setting the stage for a more detailed description and assessment of Japan’s postwar monetary policies.
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Notes
- 1.
See Miyazawa (2011) and the references therein.
- 2.
Even more ironic is the fact that John Taylor, Milton Friedman, and many other prominent economic observers are on record praising BOJ policies of the 1980s. At the time, few if any economists were warning of an economic bubble, much less a subsequent catastrophe.
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Rhodes, J.R., Yoshino, N. (2017). Japan’s Postwar Monetary Policies: Taylor Rules or Something Else?. In: Yoshino, N., Taghizadeh-Hesary, F. (eds) Japan’s Lost Decade. ADB Institute Series on Development Economics. Springer, Singapore. https://doi.org/10.1007/978-981-10-5021-3_5
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DOI: https://doi.org/10.1007/978-981-10-5021-3_5
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