2014 Reports

Japanese Monetary Policy and International Spillovers

Dekle, Robert; Hamada, Koichi

The Japanese currency has recently weakened past 100 yen to the dollar. The reason for the recent depreciation of the yen is the expectation of higher inflation in Japan, owing to the rapid projected growth in Japanese base money, the sum of currency and commercial banking reserves at the Bank of Japan. We show through our empirical analysis that recent expansionary Japanese monetary policies have generally helped raise U.S. GDP, despite the appreciation of the dollar.