Explaining the Politicization of Monetary Policy in Japan

Jennifer Holt Dwyer

Social Science Japan Journal, 2012, vol. 15, issue 2, 179-200

Abstract: Japan adopted central bank independence (CBI) over a decade ago, but politicians have tried to influence monetary policy through the power of appointments, threats of legal reform, and public suasion virtually ever since. This article examines the escalation of these efforts over the past several years, paying particular attention to the activities of the Democratic Party of Japan’s (DPJ) ‘Anti-Deflation League’ and party leaders. It outlines how emerging fiscal, regulatory, electoral, and administrative conditions created incentives for backbenchers in particular to actively challenge the Bank of Japan’s (BOJ) monetary policy authority, even though their proposals for reform were largely ignored by party leaders until very recently. This increased politicization and the central bank’s response to it have created in Japan a politics of central banking that currently sustains the BOJ’s de jure independence, but also demands greater central bank accommodation. These challenges to monetary policy authority in Japan serve as a cautionary tale for governments facing similar fiscal and political constraints and suggest that the domestic conditions that facilitated the cross-national adoption of CBI just a decade ago may be less robust than previously recognized.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1093/ssjj/jys009 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:sscijp:v:15:y:2012:i:2:p:179-200.

Access Statistics for this article

Social Science Japan Journal is currently edited by Kenneth Mori McElwain

More articles in Social Science Japan Journal from University of Tokyo and Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().