La política monetaria en Japón: lecciones a extraer en la comparación con la de los EE.UU

Alicia Gacía Herrero and Cesar Martin Machuca
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Alicia Gacía Herrero: Banco de España

EKONOMIAZ. Revista vasca de Economía, 2003, vol. 52, issue 01, 26-53

Abstract: Japan’s experience shows that very negative circumstances are required for a country to suffer from protracted deflation. The comparison of Japan’s developments in the last few years with those of the US points to large differences, which suggest that the risk of deflation in the US is low. However, the analysis of the deflation spiral in Japan could be useful to draw lessons for other countries. The first lesson to draw is that deflation is very costly and that it is difficult to anticipate. Authorities should, thus, react aggressively to avoid zero interest rates, since reaching the zero bound drastically reduces the effectiveness of monetary policy. Before reaching the zero-bound, it seems useful to adopt an inflation targeting regime, perhaps accompanied by an explicit compromise of maintaining interest rates at very low levels for a predetermined period. When zero bound is reached, the authorities still have policy instruments to fight against deflation, among them heterodox monetary measures, expansionary fiscal policy and/or substantial exchange rate depreciation. The case of Japan points to the large potential costs of these options, in terms of the central bank’s balance sheet, the sustainability of the fiscal accounts and, potentially, the stability of the international monetary system. However, Japan’s protracted stagnation and deflation is bound to be more costly

JEL-codes: E43 E52 (search for similar items in EconPapers)
Date: 2003
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Journal Article: LA POLÍTICA MONETARIA EN JAPÓN: LECCIONES A EXTRAER EN LA COMPARACIÓN CON LA DE LOS EEUU (2008)
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