This paper re-examines Japanfs experience of the quantitative easing policy in light of the policy responses against the current financial and economic crisis. Central banks use various unconventional measures in the range of financial assets being purchased and in the scale of such purchases....

A key feature of the Japanese business cycles over the 1980- 2007 period is that the fluctuation of total hours worked leads the fluctuation of output. A canonical real business cycle model cannot account for this fact. This paper uses the business cycle accounting method introduced by Chari,...

In this paper, I extend the business cycle accounting method a la Chari, Kehoe and McGrattan (2007) to a two-country international business cycle model and quantify the effect of the disturbances in relevant markets on the business cycle correlation between Japan and the US over the 1980-2008...

We show how low-frequency boom and bust cycles in asset prices can emerge from Bayesian learning by investors. Investors rationally maximize infinite horizon utility but hold subjective priors about the asset return process that we allow to differ infinitesimally from the rational expectations...

This paper examines the effects of campaign platforms in political competition when campaign platforms are partially binding: a candidate who implements a policy different from his/her platform must pay a cost of betrayal that increases with the size of the discrepancy. With partially binding...

In this paper, we propose a test for coefficient stability of an AR(1) model against the random coefficient autoregressive model of order 1 or RCA(1) model without assuming a stationary nor a non- stationary process under the null hypothesis of constant coefficient. The proposed test is obtained...

This paper is being prepared for the 2010 international conference of the Institute for Monetary and Economic Studies of the Bank of Japan, gThe Future of Central Banking under Globalization,h to be held May 26-27, 2010, in Tokyo. I am grateful to Marvin Goodfriend for helpful discussions.

In this paper we consider a two-country New Open Economy Macroeconomics model, and analyze the optimal monetary policy when countries cooperate in the face of a "global liquidity trap" -- i.e., a situation where the two countries are simultaneously caught in liquidity traps. The notable features...

An initial version of this paper was presented at a meeting of the Euro50 group in Paris on 20, November, 2009. It has benefitted from comments by David Laidler and Axel Leijonhufvud, neither of whom necessarily agree with all of its contents.

The financial sector is heavily regulated in order to prevent financial crises. The recent crisis showed how ineffective this regulation and other types of government intervention were in achieving this aim. We argue that the crisis was primarily caused by housing price bubbles. These occurred...