Professor Shigenori Shiratsuka explores central banks' exit strategies from large-scale unconventional monetary policy.
Shigenori Shiratsuka is Professor in the Faculty of Economics at Keio University. His research has focussed on monetary economics, macroeconomics, central banking, the Japanese economy and the consumer price measurement.
The abstract of the paper that the seminar will be based on: An exit strategy from large-scale unconventional monetary policy requires central banks to adjust their policy interest rates and the size of their balance sheet. Adjustments of policy interest rates are carried out using neutral interest rates as a guidepost, even in the presence of measurement uncertainty. In contrast, adjustments of balance sheet size, or quantitative tightening (QT), are implemented through trial and error without any standardized guideposts. In this paper, I will develop a guidepost for the QT process in Japan. To that end, I will examine the long-term level of the balance sheet size of the Bank of Japan (BOJ), based on the estimation results for the nonlinear shape of the reserve demand curve. I will then carry out a simulation analysis of the transition path of the BOJ’s holdings of Japanese Government Bonds (JGBs). I will also address concerns over the boundary between fiscal financing and monetary policy by proposing the "extended banknote rules," both in the long term and in the transition.
Light lunch will be served.