In The Political Economy of Japanese Monetary Policy, Cargill, Hutchison, and Takatoshi investigate the formulation and execution of monetary and financial policies in Japan within a broad technical, political, and institutional context. Their emphasis is on the period since the collapse of the Bretton Woods system of fixed exchange rates in the early 1970s, and on the effects of policies and institutions in shaping the modern Japanese economy. The authors present basic themes and recent developments, as well as their own research findings. They also review and integrate the large literature in the area. They consider theoretical arguments and empirical evidence for each topic discussed.
Topics covered include Japan's low inflation record (despite the central bank's lack of formal independence from the government); politically motivated business cycles and the timing of elections; exchange rate policy and international policy coordination; the historical development of central banking; Japan's "bubble economy" of the 1980s; and the causes, magnitude, and regulatory responses to Japan's banking and financial crisis of the 1990s.
About the Authors
Michael M. Hutchison is Professor of Economics at the University of California, Santa Cruz. He is coauthor of The Political Economy of Japanese Monetary Policy (MIT Press, 1997) and Financial Policy and Central Banking in Japan (MIT Press, 2000).
Takatoshi Ito is Professor of Economics at the Graduate School of Economics, University of Tokyo.
"Monetary policy in Japan, through the years of rapid growth, the `bubbleeconomy,' the Japanese banking crisis, and now a weak economy but withvirtual price stability, is one of the most interesting stories in moderncentral banking. Cargill, Hutchison, and Ito tell this story well. Moreimportant, they analyze the interaction of the economics and theinstitutions in a way that makes clear the central role that partypolitics, business practices, international pressures and otherinstitutional constraints often play in shaping the conduct of actualmonetary policy."
—Benjamin M. Friedman, William Joseph Maier Professor of PoliticalEconomy, Harvard University