The zero-interest-rate and the role of the exchange rate for monetary policy in Japan

In this paper we study the role of the exchange rate in conducting monetary policy in an economy with near-zero nominal interest rates as experienced in Japan since the mid-1990s. Our analysis is based on an estimated mo
In this paper we study the role of the exchange rate in conducting monetary policy in an economy with near-zero nominal interest rates as experienced in Japan since the mid-1990s. Our analysis is based on an estimated model of Japan, the United States and the euro area with rational expectations and nominal rigidities. First, we provide a quantitative analysis of the impact of the zero bound on the effectiveness of interest rate policy in Japan in terms of stabilizing output and inflation. Then we evaluate three concrete proposals that focus on depreciation of the currency as a way to ameliorate the effect of the zero bound and evade a potential liquidity trap. Finally, we investigate the international consequences of these proposals.
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Metadaten
Author:Günter Coenen, Volker Wieland
URN:urn:nbn:de:hebis:30-10157
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2003,09
Series (Serial Number):CFS working paper series (2003, 09)
Publisher:CFS
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2003
Year of first Publication:2003
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2005/06/13
Tag:exchange rates; liquidity trap; monetary policy rules; nominal rigidities; rational expectations; zero interest rate bound
SWD-Keyword:Geldpolitik; Japan; Liquiditätspräferenztheorie; Rationale Erwartung; Rentenmarkt; Transmissionsmechanismus; Wechselkurspolitik; Währungspolitik; Zins
Issue:Version March 2003
Pagenumber:44
HeBIS PPN:203502205
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:E31 Price Level; Inflation; Deflation
E52 Monetary Policy
E58 Central Banks and Their Policies
E61 Policy Objectives; Policy Designs and Consistency; Policy Coordination
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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