Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 1 (2013), No. 3, Pages 27-38

DOI: 10.12735/jfe.v1i3p27

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Could Monetary Base Rule Have Achieved Economic Growth? Recent Japanese Case

Yutaka Kurihara1  Akio Fukushima2 

1Department of Economics, Aichi University, Nagoya, Japan
2The Institute for Economics Studies, Seijo University, Tokyo, Japan


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Japan introduced unprecedented financial policy in April 2013. The Bank of Japan (the Japanese central bank) will double the monetary base to promote economic growth. The effectiveness of this large and unprecedented monetary-base rule, which is effective in recovering the economy, has received much attention not only in Japan but also all over the world. This article empirically examines whether or not this monetary-base rule would have achieved economic growth in Japan if it had been introduced in the past. The article builds a macroeconomic model that keeps the inflation rate at 2% and an empirical analysis is conducted for the past. The results show that there would be no large difference in economic growth would result from the introduction of this new rule; however, stronger monetary easing policy should have been conducted around 2008 and 2011 during the world financial crisis.

JEL Classifications: E52, E58

Keywords: abenomics, financial policy, Japan, monetary base, quantitative easing

To Cite this Article: Kurihara, Y., & Fukushima, A. (2013). Could monetary base rule have achieved economic growth? Recent Japanese case. Journal of Finance and Economics, 1(3), 27-38.

Copyright © Yutaka Kurihara & Akio Fukushima

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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Could Monetary Base Rule Have Achieved Economic Growth? Recent Japanese Case