Identifying monetary policy shocks in Japan

It is sometimes argued that the central banks influence the private economy in the short run through controlling a specific component of high powered money, not its total amount. Using a structural VAR approach, this paper evaluates this claim empirically, in the context of the Japanese economy. I estimate a model based on the standard view that the central bank controls the total amount of high powered money, and another model based on the alternative view that it controls only a specific component. It is shown that the former yields much more sensible estimates than thelatter.

Regional growth in Japan

I study the role of internal migration in income convergence acrossregions in Japan. Neoclassical theory predicts that migration should have beenan important source of convergence. Regression results, however, suggest thatmigration did not contribute to convergence. I investigate the possibilitythat this discrepancy is explained by taking into account the effects ofmigration on population composition, especially on educational attainment.I propose an empirical approach to quantify this ``educational compositioneffect''. It is shown that, although this effect did slow down convergence,its magnitude was too small to account for the discrepancy between theoryand empirics.

Japan's lost decade: Does money have a role?

We study the contribution of the stock of money to the macroeconomic outcomesof the 1990s in Japan using a small scale structural model. Likelihood-basedestimates of the parameters are provided and time stabilities of the structural relationshipsanalyzed. Real balances are statistically important for output and inflationfluctuations and their role has changed over time. Models which give moneyno role give a distorted representation of the sources of cyclical fluctuations. Thesevere stagnation and the long deflation are driven by different causes.