Survey of the effects of unconventional monetary policy in Japan

Abstract

This paper surveys empirical studies on the effects of Bank of Japan (BOJ)’s unconventional monetary policy (UMP), with a particular focus on the Quantitative and Qualitative Easing implemented from 2013 to 2024. The main findings are as follows. First, UMP effectively lowered long-term interest rates, with the purchase of long-term Japanese government bonds (JGBs) significantly contributing to this reduction. Second, the purchase of exchange traded funds (ETFs) boosted stock prices. Third, numerous studies report that UMP had positive effects on output and inflation. In broad terms, the estimated impacts of the BOJ’s purchases of long-term JGBs equivalent to a 10% increase in their bank reserves range from statistically insignificant to approximately 3% for output and from statistically insignificant to around 2 percentage points for the inflation rate, with the median effect being roughly 0.1 percentage point. However, accurately identifying monetary policy shocks remains challenging, highlighting the need for further research.