Trend inflation and monetary policy regimes in Japan

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8 Citations (Scopus)

Abstract

This paper examines the dynamics of trend inflation in Japan over the last three decades based on the smooth transition Phillips curve model. We find that there is a strong connection between the trend inflation and monetary policy regimes. The results also suggest that the introduction of the inflation targeting policy and quantitative and qualitative easing in the beginning of 2013 successfully escaped from the deflationary regime, but were not enough to achieve the 2% inflation target. Finally, our results indicate the significance of exchange rates in explaining the recent fluctuations of inflation and the importance of oil and stock prices in maintaining the positive trend inflation regime.

Original languageEnglish
Pages (from-to)137-152
Number of pages16
JournalJournal of International Money and Finance
Volume92
DOIs
Publication statusPublished - 2019 Apr
Externally publishedYes

Keywords

  • Inflation targeting
  • Phillips curve
  • Quantitative and qualitative easing
  • Smooth transition model

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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