Monetary Approach for Determining Exchange Rates and Recent Monetary Policy of Japan

Yutaka Kurihara and Akio Fukushima

International Journal of Financial Economics, 2015, vol. 4, issue 1, 23-31

Abstract: This article examines whether or not the monetary approach, or one of the main exchange rate determination theory models that consider economic fundamentals is suitable for determination of exchange rates for the Japanese yen against the US dollar. This monetary approach to exchange rate determination finds the point at which the available amount of money supply is equal to the demand to hold the money in the long run. This method has been used in the past.The monetary approach model for determination of exchange rates is appropriate for the case between Japan and the United States. However, when monetary base is used for estimation considering Japan’s recent monetary policy, this variable is not significant. Instead, other variables, namely, real incomes and prices for both countries impact the exchange rate. Also, the unconventional Japanese quantitative monetary policy is examined empirically and was found to affect the exchange rate for more than one year.

Keywords: monetary approach; monetary policy; quantitative easing; unconventional policy (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://rassweb.org/admin/pages/ResearchPapers/Paper%203_1496868768.pdf (application/pdf)

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:rss:jnljfe:v4i1p3

Access Statistics for this article

More articles in International Journal of Financial Economics from Research Academy of Social Sciences
Bibliographic data for series maintained by Danish Khalil ().