Explainig the Change in the Money Multiplier (in Japanese)

Yasuyuki Iida, Yutaka Harada and Koichi Hamada

Economic Analysis, 2003, vol. 171, 49-65

Abstract: The Japanese government's monetary policies do not to seem to have been effective in eradicating deflation and increasing the money supply. A decrease in the money multiplier is said to be one reason for this. This paper will explain why the money multiplier declined in the 1990s, using decompositions and VAR models. We obtained the following conclusions. First, the decrease of the money multiplier in the 1990s was explained by the propensity of households to hold cash. Second, the expected inflation rate had a significant influence on the money multiplier both in the 1990s and 1980s. Third, the amount of bad loans also had a significant influence in 1990s. That influence, however, could be quantitatively negligible.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:esj:esriea:171c

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