Identifying monetary policy shocks in Japan

It is sometimes argued that central banks influence dir private economy in the short run by controlling a specific component of high-powered money, no r its total amount. Using a structural VAR approach, this paper evaluates t his claim empirically, in the context of the Japanese economy. I estimate a model based on the standard view that the central bank controls the total amount of high-powered money, and another model based on the alternative vi ew that it controls only a specific component. It is shown that the former yields much more sensible estimates than the latter.