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Are Unconventional Monetary Policy and Large Scale Fiscal Policy Effective?: The Case of Japan

Yutaka Kurihara

Applied Finance and Accounting, 2017, vol. 3, issue 2, 42-48

Abstract: Japan has been under recession for more than twenty years. During that period, drastic measures to overcome deflation have been undertaken. Unconventional monetary policy and huge amounts of fiscal policy have been repeatedly implemented. This paper examines whether or not these policies were effective with a focus on exchange rates. The empirical results showed that recent monetary policies are effective at present and the effectiveness of fiscal policies has been decreasing. On the other hand, exchange rate depreciation has boosted the Japanese economy. Stock prices and wages are related strongly with the economic boom. These variables are important factors to the economy.

Keywords: exchange rate; fiscal policy; monetary policy; real GDP (search for similar items in EconPapers)
JEL-codes: R00 Z0 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:rfa:afajnl:v:3:y:2017:i:2:p:42-48