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Discussion Paper Details

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Title: A Peek Inside The Black Box: The Monetary Transmission Mechanism In Japan

Author(s): Tamim Bayoumi and James Morsink

Publication Date: April 2000

Keyword(s): Bank Behaviour, Japan and Monetary transmission Mechanism

Programme Area(s): International Macroeconomics

Abstract: This paper uses vector autoregressions to examine the monetary transmission mechanism in Japan. The empirical results indicate that both monetary policy and banks' balance sheets are important sources of shocks, that banks play a crucial role in transmitting monetary shocks to economic activity, that corporations and households have not been able to substitute borrowing from other sources for a shortfall in bank borrowing, and that business investment is especially sensitive to monetary shocks. We conclude that policy measures to strengthen banks are probably a prerequisite to restoring the effectiveness of the monetary transmission mechanism.

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Bibliographic Reference

Bayoumi, T and Morsink, J. 2000. 'A Peek Inside The Black Box: The Monetary Transmission Mechanism In Japan'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2435