Policy Reactions to the Financial Crisis in Japan: Lessons from the 1990s


We describe the propagation of the recent financial crisis to Japan and compare current monetary policy reactions by the Bank of Japan (BoJ) with actions taken during the 1990s and with current policy reactions by other major central banks. First, we review the recent literature on the origins and propagation mechanisms of financial crises. Then, we ask how the financial crisis was transmitted to Japan and describe the policy responses by BoJ. We proceed and ask what lessons have been learned by other central banks from the financial crisis of the 1990s.

Keywords: Financial crisis · Quantitative/qualitative easing · Exit strategy · Japan
JEL Classification: G21, E42, E52

University of Leipzig, Economics Department, Institute for Theoretical Economics,

Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
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