In this paper, we construct a simple measure of sectoral credit shifts, defined as the dispersion of growth rates of bank loans across sectors, and investigate what effects they had on Japan's economy and what accounted for their development. We find that (i) during the 1990s, the amount of...

This paper analyzes whether or not Japanese nominal wages are rigid downward. By using time series cross section data on wages from the Japanese Wage Census, we find that wages do not exhibit serious downward rigidity. They do decline when macro labor market conditions worsen even in periods of...

This paper proposes an empirical dynamic stochastic general equilibrium (DSGE) framework to measure the degree of monetary policy accommodation when the nominal interest rate is zero. The framework employs a hypothetical DSGE model in which the nominal interest rate can be lowered below zero...

This paper examines the determinants of long-term bond yields through a panel data analysis of forward rates in 10 developed countries. We confirm that in addition to inflation expectations and the labor productivity growth rate, which influences the natural rate of interest, fiscal conditions,...

Contingent capital (CC) is a bond that automatically converts into common stock when equity capital is impaired. This paper analyzes the determinants of the interest rate at which CC is issued and discusses the impacts of CC issuance on other financial markets. The paper shows that Japanese...

In an economy with a seniority wage system, elderly workers are subject to greater income risks when they lose their jobs than young workers are. This paper investigates: (1) whether we can observe the age dependence of idiosyncratic income risks; and (2) the importance of age dependecne for the...

This paper reviews the experience of US monetary policy from 2000 to shed some light on issues regarding the effectiveness of monetary policy in a low inflation era. Our analysis is twofold. First, based on a simple inflation forecast targeting model introduced in Svensson (1997) and Kato and...

This paper discusses the role of money market operations by the Chinese central bank in a transition period of the monetary policy framework. We argue that in recent years, especially before and after the change in the foreign exchange rate regime in July 2005, money market operations have been...

In recent years, an increasing number of central banks use macro stress-testing as a main tool to assess the robustness of the financial system against severe stresses to the economy, such as deep recessions and sharp rises in interest rates. This paper describes a framework for macro...