It Takes a Regime Shift: Recent Developments in Japanese Monetary Policy through the Lens of the Great Depression

摘要

There is a tendency for both policymakers and economists to say that humility is a key characteristic in a central banker. I agree that it is only right to admit that there is much we do not know about monetary policy and its effects on the economy. But, such humility can express itself in two very different ways. Often humility can lead to paralysis. If policymakers are unsure about the effectiveness of a policy or fear there could be large costs, they may just do nothing or be willing to take only small steps. Why take risks when we don't know if a policy will work?