This paper focuses on the recently developing financial derivatives markets, and examines the usefulness of option prices as an information variable for monetary policy implementation. A set of option prices provides us with information on the entire probability distribution of the future values...

In Japan, the Consumer Price Index (CPI) is widely used as a measure of inflation or the cost of living. The CPI is constructed by using a fixed-weight Laspeyres formula. This formula is used mainly because of its ease of calculation and comprehension, thus limiting the total cost of...

Since the late 1980s, the Japanese has experienced tremendous rise and fall of asset prices and large fluctuations of real economic activity, while general price level has remained relatively stable. Such developments raised a question of whether monetary policy should have targeted asset prices...