This paper summarizes non-traditional monetary policy measures adopted by the Bank
of Japan (BOJ) during the last two decades and by other G7 central banks since the start
of the current global financial turmoil and analyzes the effectiveness of such measures.
The paper begins with a typology of policies usable near the zero lower bound on
interest rates (ZLB). They are:(i) forward guidance of future policy rates;(ii) targeted
asset purchases;(iii) and quantitative easing (QE). Using this typology, I review the
measures adopted by the BOJ and other central banks. I then offer a news analysis of
the effects of the measures adopted by the BOJ on asset prices, comparing them with
those adopted by the Fed. Many of the measures, with the exception of strategy (iii), are
shown to have moved asset prices in the expected directions. Another exception is that
most of the monetary easing measures failed to weaken the yen. Despite some effects on
asset prices, however, the measures have failed to stop the deflationary trend of the
Japanese economy clearly. I discuss some possible reasons for this and more general
implications for monetary policy.
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