IMPACT OF QUANTITATIVE EASING POLICY ON THE ECONOMIC GROWTH: EVIDENCE FROM THE JAPANESE ECONOMY

Abstract

Policies of quantitative easing have been seen as a substantial contributor to economic growth, and this phenomenon requires the focus of new studies. Consequently, the current research explores the effect of quantitative easing policies, such as those relating to loan expansion and security purchases, on Japan's economic growth (EG). Inflation, exports, and foreign direct investment (FDI) were used as control variables in the model of the present study. From 1991 to 2020, secondary data were collected from the Central Bank of Japan and World Development Indicators (WDI) databases. To examine the relationship between variables, the Autoregressive Distributed Lag (ARDL) model was utilized in the present study. According to the findings, quantitative easing policies, such as policies relating to loan expansion and security purchases, have a favorable effect on the EG in Japan. In addition, the results revealed that control variables such as FDI, inflation, and exports have a positive relationship with EG in Japan. This article assists policymakers in constructing effective EG policies through the implementation of quantitative easing initiatives.