The Effectiveness of the Negative Interest Rate Policy in Japan: An Early Assessment

Yusaku Honda () and Hitoshi Inoue ()
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Yusaku Honda: Department of Informatics, Kansai University
Hitoshi Inoue: Faculty of Economics, Sapporo Gakuin University

No 17-02, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper examines the effects of the negative interest rate policy (NIRP) introduced by the Bank of Japan in January 2016. It has effectively stimulated private residential investment, and in lowering long-term interest rates, it has likely supported private nonresidential investment. There is also reason to believe that it likely stopped the appreciation of the yen and arrested the downward trend in Japanese stock prices around August 2016. Overall, we find that the NIRP has had expansionary effects, and therefore serves as a legitimate policy tool in alleviating Japan fs zero-interest rate lower bound, notwithstanding some potential negative side effects.

Keywords: Negative Interest Rates; Residential/Nonresidential Investment; Foreign Exchange Rates (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-02
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:1702

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