Twenty Years of Unconventional Monetary Policies: Lessons and Way Forward for the Bank of Japan

Niklas Westelius

No 2020/226, IMF Working Papers from International Monetary Fund

Abstract: The Bank of Japan has used unconventional monetary policies to fight deflation and stabilize the financial system since the late 1990s. While the Bank of Japan’s reflation efforts have evolved over time, inflation and inflation expectations have remained stubbornly low. This paper examines the evolution of monetary policy in Japan over the past twenty years, in order to draw relevant lessons and propose ways to strengthen the Bank of Japan’s policy framework. In doing so the analysis focuses on three aspects of monetary policy: objectives and goals; policy strategies; and the communication framework. Moreover, the paper discusses coordination between monetary, fiscal, and financial policies, and how the corresponding institutional design could be strengthened.

Keywords: Japan; unconventional monetary policy; Bank of Japan; inflation expectations; WP; BoJ staff; inflation expectation; Policy objective; price stability target; inflation target; JGB Holdings; overshooting commitment; Policy strategy; BoJ's willingness; BoJ's policy; BoJ's overshooting commitment; BoJ's inflation; Price stabilization; Inflation; Inflation targeting; Financial sector stability; Unconventional monetary policies; Global (search for similar items in EconPapers)
Pages: 28
Date: 2020-11-08
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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