An Exception that Proves the Rule: Japanese Monetary Policy under the Classical Gold Standard, 1897-1914

Shinji Takagi

No 2024-11, AGI Working Paper Series from Asian Growth Research Institute

Abstract: The paper explores Japanese monetary policy under the classical gold standard (1897-1914), while providing a succinct exposition of the distinguishing features of the Japanese gold standard regime. The paper, explaining how the Bank of Japan conducted monetary policy, finds that, as a general practice, (i) it used fiduciary issues to offset movements in monetary gold so as to stabilize the supply of currency; (ii) it moved the discount rate in the same direction as the government moved the extra issue tax rate; and (iii) it raised the discount rate in response to an increase in gold outflows. The rules-of-the-game-like behavior of discount rate policy, motivated by the central bank's mandate to preserve gold convertibility, was robust and consistent, challenging the semi-consensual view that violations of the rules were frequent and pervasive under the classical gold standard.

Keywords: classical gold standard; rules of the game; Japanese monetary policy; Japan under the classical gold standard; Bank of Japan discount rate policy (search for similar items in EconPapers)
JEL-codes: E42 E58 F33 F55 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:agi:wpaper:02000096

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