Supplement | HBS Case Collection | May 2013

Kinyuseisaku: Monetary Policy in Japan (C)

by Laura Alfaro and Hilary White

Abstract

Assuming office in December 2012, Prime Minister Shinzo Abe was determined to revive Japan's stagnating economy through an ambitious plan known as 'Abenomics.' Under the guidance of the newly appointed governor of the central bank, Haruhiko Kuroda, the Bank of Japan adopted quantitative easing as its new monetary policy, pledging to double the nation's monetary base in two years through the purchase of long-term government bonds. While Kuroda insisted that Japan needed to "use every means available" to combat deflation, critics wondered whether inflation would increase the nation's public-sector debt to unsustainable levels or outpace growth in wages. Furthermore, skeptics debated whether Prime Minister Abe was wise to make the Bank of Japan the key player in moving the nation toward economic growth. Others questioned whether, unlike in the past, the Bank of Japan would take the necessary steps to carry through with the policy.

Keywords: Japan; inflation targeting; inflation; Abenomics; monetary policy; stimulus; quantitative easing; government bonds; Macroeconomics; Inflation and Deflation; Money; Economic Slowdown and Stagnation; Japan;

Citation:

Alfaro, Laura, and Hilary White. "Kinyuseisaku: Monetary Policy in Japan (C)." Harvard Business School Supplement 713-086, May 2013.