Effectiveness of unconventional monetary policy at the zero lower bound: evidence from Japan

Abstract

In this thesis I provide new evidence on unconventional monetary policy at the zero lower bound using Japanese data. After the recent financial crisis, undesirably low levels of inflation and policy rates being stuck at zero in the U.S. and the EU, unconventional monetary policy became a hot topic. Japan has near zero short term interest rates for over twenty years, which makes it a perfect laboratory for the topic. I show that even though interest rates are stuck at zero in Japan, monetary policy can affect asset prices through central bank communication. This combines earlier studies done for the U.S. and the EU.