Comments on "Price Stability and Japanese Monetary Policy."

Hiroshi Fujiki, Kunio Okina and Shigenori Shiratsuka ()
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Kunio Okina: Institute for Monetary and Econ Studies, Bank of Japan

Monetary and Economic Studies, 2004, vol. 22, issue 3, pages 25-36

Abstract: This commentary summarizes the authors' main points of agreement and disagreement with respect to the proposal written by Dr. Hetzel. The authors agree with Dr. Hetzel's proposal on four points: after a central bank has lowered the interest rate to zero, (1) a central bank is not in fact powerless to stop deflation; (2) it does not make sense to focus on the quantity of the monetary base per se; (3) it is important to influence market expectations if monetary policy is to be effective; and (4) central bank solvency holds some importance. The authors disagree with Dr. Hetzel's proposal on three points: (1) transmission channels of quantitative easing; (2) potential costs and benefits of his proposal; and (3) the timing of introduction of an explicit nominal anchor.

JEL-codes: E43 E52 E31 (search for similar items in EconPapers)
Date: 2004
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