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Asset Price Bubbles, Price Stability, and Monetary Policy: Japan's Experience
Kunio Okina,Shigenori Shiratsuka +1 more
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In this paper, the authors examined the emergence and bursting of the bubble economy from the viewpoint of monetary policy management and found that the Bank of Japan should have given more consideration to asset price fluctuations in formulating its monetary policy.Abstract:
Japan's economy has experienced an extremely large swing against the backdrop of the emergence, expansion, and bursting of asset price bubbles. When examining the emergence and bursting of the bubble economy from the viewpoint of monetary policy management, should the Bank of Japan have given more consideration to asset price fluctuations in formulating its monetary policy? Or, should the Bank not have been perplexed with asset price fluctuations and conducted policies focusing only on the general price level such as inflation targeting? In answering these questions and deciding policy actions, to what extent should the Bank consider financial system problems? This paper aims at forming some tentative answers to these questions.read more
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A Tale of Two Perspectives: Old or New Challenges for Monetary Policy?
TL;DR: The authors examines recent experience through two intentionally polarised perspectives, viz. the "continuity" and "new-environment" views, which lead to somewhat different conclusions regarding the nature of the challenges central banks are likely to face in the current economic landscape and the policy responses that may be appropriate.
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The Taylor Rule and the Practice of Central Banking
TL;DR: In this paper, the authors examine how the Taylor rule is used as an input in monetary policy deliberations and decision-making at central banks and describe how and why it became integrated into policy discussions and in some cases the policy framework itself.
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Earnings Management Behaviors under Different Economic Environments: Evidence from Japanese Banks
TL;DR: In this article, the authors investigated Japanese banks' earnings management behavior under three distinct economic environments: (1) high-growth with asset price bubble economy (1985-1990); (2) stagnant growth with financial distress economy (1991-1996); and (3) severe recession with credit crunch economy (1997-1999).
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The Eurosystem, the US Federal Reserve and the Bank of Japan: Similarities and Differences
TL;DR: This paper provided a systematic comparison of the Eurosystem, the US Federal Reserve and the Bank of Japan in terms of monetary policy implementation based on simple "over-the-counter" policy reaction functions.
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Time of Troubles: The Yen and Japan's Economy, 1985-2008
TL;DR: This paper explored the links between macroeconomic developments, especially monetary policy, and the exchange rate during the period of Japan's bubble economy and subsequent stagnation, focusing on the interaction of short-term developments driven by monetary factors and the long-term determinants of the real exchange rate's equilibrium path.
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Discretion versus policy rules in practice
TL;DR: In this article, the authors examine how recent econometric policy evaluation research on monetary policy rules can be applied in a practical policymaking environment, and the discussion centers around a hypothetical but representative policy rule much like that advocated in recent research.
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Inside the Black Box: The Credit Channel of Monetary Policy Transmission
TL;DR: The credit channel theory of monetary policy transmission holds that informational frictions in credit markets worsen during tight money periods and the resulting increase in the external finance premium enhances the effects of monetary policies on the real economy as discussed by the authors.
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Inside the Black Box: The Credit Channel of Monetary Policy Transmission
Ben S. Bernanke,Mark Gertler +1 more
TL;DR: The credit channel theory of monetary policy transmission holds that informational frictions in credit markets worsen during tight money periods and the resulting increase in the external finance premium enhances the effects of monetary policies on the real economy as discussed by the authors.
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Forecasting Output and Inflation: The Role of Asset Prices
TL;DR: The authors examined the predictive performance of asset prices for inflation and real output growth in seven OECD countries for a span of up to 41 years (1959 1999) and concluded that good forecasting performance by an indicator in one period seems to be unrelated to whether it is a useful predictor in a later period.
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Should Central Banks Respond to Movements in Asset Prices
Ben S. Bernanke,Mark Gertler +1 more
TL;DR: In this paper, Shiller et al. show that, once the predictive content of asset prices for inflation has been accounted for, there should be no additional response of monetary policy to asset price volatility, except insofar as they affect the inflation forecast.