Trend inflation and monetary policy regimes in Japan

Tatsuyoshi Okimoto

Journal of International Money and Finance, 2019, vol. 92, issue C, 137-152

Abstract: This paper examines the dynamics of trend inflation in Japan over the last three decades based on the smooth transition Phillips curve model. We find that there is a strong connection between the trend inflation and monetary policy regimes. The results also suggest that the introduction of the inflation targeting policy and quantitative and qualitative easing in the beginning of 2013 successfully escaped from the deflationary regime, but were not enough to achieve the 2% inflation target. Finally, our results indicate the significance of exchange rates in explaining the recent fluctuations of inflation and the importance of oil and stock prices in maintaining the positive trend inflation regime.

Keywords: Phillips curve; Inflation targeting; Quantitative and qualitative easing; Smooth transition model (search for similar items in EconPapers)
JEL-codes: C22 E31 E52 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (10)

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Working Paper: Trend Inflation and Monetary Policy Regimes in Japan (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:92:y:2019:i:c:p:137-152

DOI: 10.1016/j.jimonfin.2018.12.008

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