A Study On The Efficiency Of Japan's Monetary Policy Since 1990s

Before 1990s, the Japanese economy experienced the alternations of growth and crisis so many times that the Japanese banks implemented the monetary policy under the original economic system and this has obtained a better macroeconomic regulation and control effect and at the same time it has facilitated the Japanese economy growth pattern which is extremely successful. But after the 1990s, with the perdition of the economy bubble, the Japanese economy fell into the long-term decline, and also had the deflation situation. This crisis is called "the lost ten years ". For this, the Japanese banks adopted a series of monetary policies that are on the purpose of the economy expansion and recovery. However all of these policies have been proved not to be effective.How is the effectiveness of the Japanese monetary policy since1990s? In order to solve this problem, this article discusses it from the aspect of the theory and the demonstration.On the foundation of the evolution of a series of monetary policies implemented by the Japanese banks in the 1990s, this article analyses the effectiveness of the monetary policies on the theory and the demonstration aspect from the macroscopic angle. In the theoretical analysis part, this article utilizes IS-LM model. According to the related data, the interest rate elasticity of investment and the currency demand has been calculated, the slope of the IS and the LM curve trend has been judged. Through the comparison we discovered Japanese IS-LM model is different from the IS-LM model of the macroscopic economic theory in tradition. That means the Japanese IS-LM model has had the distortion, which had proved the expiration of the Japanese monetary policy. In the demonstration analysis part, after the analysis of the influences of the quantity of the monetary supply on the consumption, investment and the import and export through the interest rate, we discovered the Japanese monetary policy conduction mechanism received hindrance in the above aspects resulting in the ineffectiveness of the monetary policy. This discovery has provided a reference for our country so that we can be more effective in implementing our monetary policy.Through the analysis, this article shows the Japanese monetary policy potency in the 1990s has gone the drop tendency and the expansion monetary policy, which is unable to stimulate the economy independently, is limited to the economical stimulation, and it only works for the stabilization of the economy in a certain degree.