Kuroda - Özatay Flashcards
(15 cards)
Heterodox (unconventional) Monetary policy
- Quantitative easing (credit expansion)
- Forward guidance
- FED, BoJ, BoE first applied
90’s to 97 crisis for japan
- strong industrial structure, weak financial str.
- inc non-performing assets
- declining prices
- appreciation of yen
- deteriorating foreign trade
- 97 crisis: collapse of fin inst.
- summer 98: inf rate below 0: drop dramatically policy rate from %6 to %0.25
Krugman on japanese eco
- liquidity trap
- increase money supply
- increase inf exp
- make real interest rates sufficiently negative
BoJ - 99
- dot-com crisis
- feb: ZIRP zero int rate pol
- apr: Qualitative forward guidance
Forward Guidance Types
- Open ended guidance (eg. no increase for a long time)
- Calender based guidance (announce the date of the cahnge in pol rate)
- Circumstantional guidance (BoE: keep unchanged until unemp below %7)
BoJ - 2000-2001
- BoJ lifted zirp after recovery
- but dot-com effected them
- QE and Forward guidance
- QE flatten the yield curve better than zirp (to rise demand)
BoJ - 2004-2013
-04: QE, 5 trillion to 30
-06: QE ended, raised rate to 0.25, CPI increased
(08 global crisis-CPI negative)
-10: Comprehensive monetary easing - purchase broad range of assets
-12: introduced “price stability goal”
-13: both qualitative and quantitative monetary easing (main difference: gave more detail to influence private sector expectations)
Bernanke&Reinhert QE
- Expand the size of CB’s balance sheet
- Change the composition of CB’s balance sheet
- Shape the interest rate expectations
Difference between conv and unconv QE
purchases of the CB
FED 2009-2015
08 - cuts its short term interest rate (almost zero)
09 - declared “near zero for an extended period”
11 - mid 2013 for extended period
12 - late 2014
12 - mid 2015
dec12 - “after a considerable time”
13 - “as long as the unemp above %6.5”
14 - %6.5 very quickly, revised the treshold
dec14 - “considerable time=6 months”
mid15 - stopped buying bonds
Result of liquidity for developing countries
- Appreciation of the currency (increasing current account - fragileness)
- Foreign demand decrease (again CA deficit)
- Low cost liquidity leading to increasing imports (again CA deficit)
To control expectations (price stability)
credit policy - macro, prudential tools
To control credit growth (price stability)
interest rate policy - weekly repo
To control exchange rate (fin stability)
liquidity policy - interest rate corridor
unconventional means…
CB enters the market as an important actor
