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Discretionary Monetary Policy Versus Rules: The Japanese Experience During 1986-91
Author:
Mr. Guy M Meredith
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Series:
IMF Working Papers
Volume/Issue:
Volume 1992: Issue 063
Language:
English
Publication Date:
01 Aug 1992
DOI:
https://doi.org/10.5089/9781451848335.001
ISBN:
9781451848335
ISSN:
1018-5941
Pages:
28
Keywords:
WP; nominal interest rate; money demand; reaction function; inflation target; target inflation; inflation change; inflation rule; movements vis-á-vis; Inflation; Exchange rates; Short term interest rates; Personal income; Real interest rates
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper compares the hypothetical performance of various monetary policy rules with that of the discretionary policies actually pursued in Japan over the 1986-91 period. The results suggest that simple rules based on targeting growth in either the money supply, nominal income, or prices would have failed to stabilize economic variables more successfully than discretionary policies. At the same time, it appears that an indicator of monetary conditions incorporating movements in the real exchange rate and the real interest rate would have been useful in assessing the effect of current policies on future activity.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund