ASIAN DEVELOPMENT BANK INSTITUTE SAYURI SHIRAI SECOND EDITION MISSION INCOMPLETE Reating Japan’s Economy 2018 Asian Development Bank Institute All rights reserved. Published in 2018. ISBN 978-4-89974-097-1 (Print) ISBN 978-4-89974-098-8 (PDF) The views in this publication do not necessarily refect the views and policies of theAsianDevelopment Bank Institute (ADBI), its Advisory Council, ADB’s Board orGovernors, or the governments of ADB members.ADBI does not guarantee the accuracy of the data included in this publication andaccepts no responsibility for any consequence of their use. ADBI uses proper ADBmember names and abbreviations throughout and any variation or inaccuracy, includingin citations and references, should be read as referring to the correct name.By making any designation of or reference to a particular territory or geographicarea, or by using the term “recognize,” “country,” or other geographical names in thispublication, ADBI does not intend to make any judgments as to the legal or other statusof any territory or area. Users are restricted from reselling, redistributing, or creating derivative works withoutthe express, written consent of ADBI. Notes: In this publication, “$” refers to United States dollars. ADB refers to “China” by the name People’s Republic of China. Asian Development Bank InstituteKasumigaseki Building 8F3-2-5, Kasumigaseki, Chiyoda-kuTokyo 100-6008, Japanadbi iii CONTENTS TABLES AND FIGURES viii INTRODUCTION1 CHAPTER 1JAPAN’S MALAISE AND UNCONVENTIONAL MONETARY EASINGFROM1999TO 2006 5 1.1Long-Standing Mild Defation since the Late 1990s 5 1.2Zero Interest Rate Policy and Forward Guidance of 1999–2000 11A. Adoption of the Zero Interest Rate Policy 12B.Lifting of the Zero Interest Rate Policy and the Government’s Opposition 13 1.3Quantitative Easing (QE) of 2001–2006 15A. The Features of the QE Policy 15B. Improved Economic Performance during 2001–2006 17C.Moderately Improved Price Performance during 2001–2006 17D.Decision to Exit from QE Policy and Government’sConcerns over the Exit Decision 18E.Introducing an Understanding of Price Stability 20F. Refections on the Timing of Exit from QE Policy 21 CHAPTER 2COMPREHENSIVE MONETARYEASING (CME) FROM OCTOBER2010 TO MARCH 2013 24 2.1BOJ’s Policy Actions prior to the Adoption of CME 24 2.2Basic Features of CME 28A. Establishing the Asset Purchase Program 29B.Introducing an Open-Ended Asset Purchasing Method from 2014 31 2.3Forward Guidance and Adoption of the 2% Price Stability Target 31A.Evolution of Forward Guidance on the Monetary Easing Stance 32B. BOJ’s Initial View on Price Stability 33C.Adoption of the 2% Price Stability Target through the Joint Statement with the Government 33 。。。。。。