In recent years, an increasing number of central banks use macro stress-testing as a main tool to assess the robustness of the financial system against severe stresses to the economy, such as deep recessions and sharp rises in interest rates. This paper describes a framework for macro...

In this paper, we empirically analyze the interaction between the distortions in the real side of the economy (real distortion) and those in the financial side of the economy (financial distortion) in Japan after the 1990s. We focus on protracted economic stagnation after the bursting of the...

We study the term structure of interest rates and monetary policy in Japan empirically, using a macro-finance model. In particular, we investigate whether or not Japan's low long-term interest rates can be explained with economic rationality by taking into account some key features of the...

Many empirical studies show common empirical findings that the exchange rate pass-through to import prices in advanced countries declined in the 1990s. Some of those studies, however, draw contrasting conclusions regarding the factors behind the decline. Campa and Goldberg (2002) point out that...

In this paper, we present an overview of theoretical research on the choice of an invoice currency for exports from the perspective of expected profit maximization. We then use this theory as a basis to offer a current assessment and future outlook regarding the use of the yen in trade...

In this paper, we empirically examine the movement of the exchange rate pass-through to the aggregate import prices in Japan from the 1980s through 2001. We demonstrate that the exchange rate pass- through to Japan's import prices fell in the 1990s, and such a decline occurred mainly during the...

In this paper, we carry out qualitative and quantitative analyses of impacts of factor market distortions on Japan's economic stagnation in the 1990s, thereby showing that resolution of structural impediments is essential for the restoration of sustained economic growth. Distortions in factor...

Empirical analyses of firms' Price-setting behavior show that while the exchange rate pass-through of Japanese firms is low (many Japanese firms adopt pricing-to-market [PTM]), the export prices charged by U.S. firms nearly perfectly reflect foreign exchange rate fluctuations. This paper...

This paper selectively reviews the recent literature on currency regimes in Europe, the Americas, and East Asia. We argue that, given the global interdependence among today's economies, currency regimes should always be evaluated in relation to monetary policy, fiscal policy, structural...

There has recently been a proliferation of new quantitative tools as part of various initiatives to improve the monitoring of systemic risk. The "SysMo" project takes stock of the current toolkit used at the IMF for this purpose. It offers detailed and practical guidance on the use of current...