Taming Japan's Deflation: The Debate over Unconventional Monetary Policy

by Yoshiko Kojo, Gene Park, Saori N. Katada, Giacomo Chiozza

Overview

Bolder economic policy could have addressed the persistent bouts of deflation in post-bubble Japan, write Gene Park, Saori N. Katada, Giacomo Chiozza, and Yoshiko Kojo in Taming Japan's Deflation. Despite warnings from economists, intense political pressure, and well-articulated unconventional policy options to address this problem, Japan's central bank, the Bank of Japan (BOJ), resisted taking the bold actions that the authors believe would have significantly helped.

With Prime Minister Abe Shinzo's return to power, Japan finally shifted course at the start of 2013 with the launch of Abenomics—an economic agenda to reflate the economy—and Abe's appointment of new leadership at the BOJ. As Taming Japan's Deflation shows, the BOJ's resistance to experimenting with bolder policy stemmed from entrenched policy ideas that were hostile to activist monetary policy. The authors explain how these policy ideas evolved over the course of the BOJ's long history and gained dominance because of the closed nature of the broader policy network.

The explanatory power of policy ideas and networks suggests a basic inadequacy in the dominant framework for analysis of
the politics of monetary policy derived from the literature on central bank independence. This approach privileges the interaction between political principals and their supposed agents, central bankers; but Taming Japan's Deflation shows clearly that central bankers' views, shaped by ideas and institutions, can be decisive in determining monetary policy. Through a combination of institutional analysis, quantitative empirical tests, in-depth case studies, and structured comparison of Japan with other countries, the authors show that, ultimately, the decision to adopt aggressive monetary policy depends largely on the bankers' established policy ideas and policy network.

Product Details

ISBN-13:	9781501728198
Publisher:	Cornell University Press
Publication date:	11/15/2018
Series:	Cornell Studies in Money
Sold by:	Barnes & Noble
Format:	eBook
Pages:	264
File size:	5 MB
Age Range:	18 Years

About the Author

Gene Park is Associate Professor of Political Science at Loyola Marymount University. He is the author of Spending without Taxation. Saori N. Katada is Associate Professor in the School of International Relations at the University of Southern California. She is the author of Banking on Stability. Giacomo Chiozza is an expert in world politics and statistical modeling, and co-author, most recently, of Leaders and International Conflict. He is Associate Professor in the Department of International Studies at the American University of Sharjah. Yoshiko Kojo is Professor in the Department of Advanced Social and International Relations at the University of Tokyo. She is a contributor to Japan in International Politics.

What People are Saying About This

Ben S. Bernanke

Taming Japan’s Deflation provides interesting new insights on the making of monetary policy in Japan.

William Grimes

Taming Japan's Deflation provides the most detailed and up-to-date English-language examination of the Bank of Japan as an institution. One of the most puzzling macroeconomic stories of the last two decades has been the BOJ’s failure to effectively address the challenge of deflation. The authors thoroughly and clearly address this puzzle, to which political scientists and economists have often pointed but never really explored comprehensively.

Editorial Reviews

An informed and in-depth look at the institutional, intellectual, and political environment that allowed deflation to take root... Taming Japan's Deflation is indispensable for anyone who wants to understand why Japan lingered in deflation for so long and how it switched to different policies that may be leading to better outcomes.

Pacific Affairs

This is an outstanding book on a topic of great importance... this book provides the most detailed and insightful account written in the English language of the ideational and political institutional contexts that inform the Bank of Japan's (BOJ) decisions about monetary policy in the contemporary era.

Perspectives on Politics

"Taming Japan's Deflation provides the most detailed and up-to-date English-language examination of the Bank of Japan as an institution. One of the most puzzling macroeconomic stories of the last two decades has been the BOJ’s failure to effectively address the challenge of deflation. The authors thoroughly and clearly address this puzzle, to which political scientists and economists have often pointed but never really explored comprehensively."

William Grimes

"Taming Japan’s Deflationprovides interesting new insights on the making of monetary policy in Japan."

Ben S. Bernanke