Unconventional Monetary Policies Strategies: A Review with Case Study of the United States and Japan

Abstract

This thesis explores unconventional monetary policy instruments and their impact on the economy, specifically during periods of economic crisis when traditional tools become insufficient, with a case study of the United States and Japan. The objective is to comprehend the actual operation of these policies, including quantitative easing, forward guidance, and negative interest rates, as well as their effectiveness across different economic contexts. This study emphasises the success and limits of unconventional monetary policy tools by tracing the history of monetary policy and investigating the challenges posed by zero lower-bound interest rates. Although these policies have been instrumental in stabilising financial markets and preventing deflation, their long-term effects are frequently limited by the economy's more profound structural issues. The research indicates that the efficacy of UMPs is significantly influenced by the specific economic context and that these policies must be implemented in conjunction with broader structural reforms to effectively address the underlying issues