The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2012, April. Volume: 9 - Issue: 1

The Financial Crisis in Japan: Causes and Policy Reactions by the Bank of Japan

by Uwe Vollmer ; Ralf Bebenroth

Start page: 51 - End page: 77

Keywords: Financial crisis; Constructive ambiguity; Counterparty/liquidity risk; Quantitative/qualitative easing; Japan; Zero interest rate policy

Jel code: G21; E42; E52



This paper describes the transmission of the recent financial crisis to Japan and compares the monetary policy reactions by the Bank of Japan (BoJ) with those during the 1990s, and with reactions by other major central banks. The paper first reviews the recent literature on the origins and transmission mechanisms of financial crises. We then consider how the financial crisis was transmitted to Japan and describe the responses by BoJ. The paper then proceeds and analyses the lessons that have been learnt by the BoJ and other central banks from the financial crisis of the 1990s.

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