In this paper, we calculate the potential output and the output gap using a Bayesian-estimated DSGE model of Japan's economy. The model is a two-sector growth model that takes into account growth rate shocks including investment-goods sector-specific technological progress. For bridging the gap...

In this paper, we propose a new method for identifying monetary policy shocks under the non-negativity constraint on nominal short-term interest rates and use it to estimate the impact of monetary policy on the Japanese economy since the bursting of the asset bubble. Our method boasts three...

In general, the yield spread between long- and short-term bonds contains useful information for future economic activity and inflation. Particularly, it usually reflects market participants' expectations of future monetary policy and credit demand. However, it is becoming increasingly difficult...

Recent studies show that the Taylor rule possesses desirable properties in terms of generating determinacy and E-stability of rational expectations equilibria under sticky prices. This paper examines whether this policy rule retains these properties within a discrete-time...

"Royalties and License Fees" in balance of payments statistics includes payments accruing from patent, trademarks, registered designs, utility models, copyrights and technical instruction. Japan's balance of royalties and license fees had remained consistently in deficit since statistics were...

Using a model of island economy where financial markets aggregate dispersed information of the public, we analyze how two-way communication between the central bank and the public affects inflation dynamics. When inflation target is observable and credible to the public, markets provide the bank...

We study the term structure of interest rates and monetary policy in Japan empirically, using a macro-finance model. In particular, we investigate whether or not Japan's low long-term interest rates can be explained with economic rationality by taking into account some key features of the...

This paper aims to reconsider the mechanism of the negative yen funding costs for foreign banks in the foreign exchange (FX) swap market, almost constantly observed since the adoption of the quantitative monetary easing policy in March 2001. Our main findings are as follows. First, if the...

The Bank of Japan (hereinafter referred to as the Bank) determined to undertake the so-called "quantitative easing policy" in March 2001, in which current account balances at the Bank were adopted as the Bank's main operating target. Since the start of the quantitative easing policy, the Bank...

When a firm switches its listing venue, there is often a significant increase in the number of shareholders and the trading activities. According to Merton [1987], an increased shareholder base improves diversification of risk, which has a positive impact on the stock price. Amihud and Mendelson...