Policy Duration Effects, Quantitative Monetary Easing Policy and Economic Growth: Evidence from Japanese Time Series Data

This paper examines the influences of policy duration effects and quantitative monetary easing policy (QMEP) implemented by the Bank of Japan from 2001-2006 on economic growth toward future periods. We employed a simple equation with the term spread explaining economic growth, and obtained the following results. The positive effects of the term spread on economic growth over the subsequent 21 and 24 months decreased in 2001. And the estimated coefficients on term spread were negative and significant after the shift in both cases. Thus, we conclude that the QMEP and policy duration effects in the 2000s aided economic growth in Japan to some extent.