Deflation Expectation Financial System and Decline in Money Multiplier(in Japanese)

The money multiplier is in a continuous downward trend now since the bubble burst, and, in addition, the trend has accelerated after 2000. It is said that the monetary policy is difficult because the money multiplier has declined. To think about the monetary policy for the future, we should think about the cause of the decline of the money multiplier. I want to verify two typical hypotheses "Deflation Expectation Hypothesis" and "Financial System Hypothesis" for the decision of the money multiplier. I verified the Expected Deflation Hypothesis about a gradual money multiplier downward trend in 90's. The cash ratio rise of the non-financial sector explains 90's decline of the money multiplier. A significant influence of expected deflation on the money multiplier was confirmed by observing the result recursive and structural VAR model. On the other hand, it was shown that the Financial System Hypothesis didn't have the interpretability for the sharp fall of the money multiplier after 2000. As mentioned above, the deflation expectation's having the key role as one of the causes of the decline of the money multiplier. Therefore, the effect of the monetary policy was not lost due to the decrease in the money multiplier. It is one circumstantial evidence with an improper monetary policy.