午夜剧场

Monetary policy, conducted by central banks with the goal of price stability, possesses aspects of both "science" and "art." From the former perspective, a scientific approach is emphasized, where monetary policy management is planned and its results verified based on theoretical analysis using macroeconomic models and empirical analysis using data. On the other hand, from the latter perspective, craftsmanship-like elements are considered important, where subtle signals are read from movements in the macroeconomy and financial markets to lead to more accurate policy judgments.

In the 1990s, dynamic stochastic general equilibrium models known as New Keynesian models were developed, establishing a theoretical framework that supports inflation targeting, the standard framework for monetary policy management. In this context, the aspect of monetary policy as a "science" became more strongly recognized.

However, during the global financial crisis after 2008, the importance of craftsmanship-like "art" increased once again. Many central banks in advanced economies faced the zero lower bound and adopted unconventional monetary policies that involved purchasing various financial assets and expanding the central bank's balance sheet. However, the accumulation of theoretical and empirical research regarding unconventional monetary policy cannot be said to be sufficient. In the previously widely used New Keynesian models, the stance of monetary policy was summarized by the policy interest rate, and the central bank's balance sheet, money, and credit volume did not appear. While extending these theoretical models is an urgent task, it is still a work in progress.

Monetary policy decisions are made in real-time using all information available at each point in time. To make such policy judgments more robust, it is important to refine the "science" of monetary policy by accumulating theoretical and empirical research, while simultaneously passing down the "art" of accurately applying academic knowledge within a transforming financial and economic environment.

Since the late 1990s, Japan has pioneered various unconventional monetary policies, ranging from the zero interest rate policy, which promises to maintain policy rates near zero for the future, to quantitative easing policies that increase the outstanding balance of central bank current accounts to a certain level, and the current quantitative and qualitative monetary easing. Utilizing my 32 years of experience as an economist at the Bank of Japan after graduating from the Faculty of Economics, I hope to conduct research and education that bridges the "science" and "art" of monetary policy.