NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Specification and Analysis of a Monetary Policy Rule for Japan

Bennett T. McCallum

NBER Working Paper No. 4449 (Also Reprint No. r1854)
Issued in September 1993
NBER Program(s):   EFG   ME

This paper investigates the performance, in several small-scale models of the Japanese economy, of an operational monetary policy rule related to ones previously considered for the United States. The rule dictates settings of the monetary base that are designed to produce values of nominal GNP close to targets that grow smoothly at a noninflationary rate. Simulations with quarterly data for the period 1972-1992 yield predominantly favorable results. Experiments with an interest rate instrument are also conducted but the simulated performance is less desirable. One section discusses issues concerning monetary base control in Japan.

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Document Object Identifier (DOI): 10.3386/w4449

Published: Bank of Japan Monetary and Economic Studies, vol. 1, no. 2, November 1993p. 1-45 citation courtesy of

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