david dorn, and gordon h. hanson ( 2013 ), “ untangling trade and technology : evidence from local labor markets, ” nber working paper series 18938 ( cambridge, mass. : national bureau of economic research, april ). for a discussion of mobility in income distribution, see raj chetty, nathaniel hendren, patrick kline, emmanuel saez, and nicholas turner ( 2014 ), “ is the united states still a land of opportunity? recent trends in intergenerational mobility, ” nber working paper series 19844 ( cambridge, mass. : national bureau of economic research, january ). for more information on intergenerational mobility, see markus jantti, bernt bratsberg, knut røed, oddbjørn raaum, robin naylor, eva osterbacka, anders bjorklund, and tor eriksson ( 2006 ), “ american exceptionalism in a new light : a comparison of intergenerational earnings mobility in the nordic countries, the united bis central bankers ’ speeches the role of monetary policy as must be apparent, the challenges i have discussed are not susceptible to easy or rapid solution. it is equally apparent that monetary policy cannot be the only, or even the principal, tool in addressing these challenges. but that is not to say it is irrelevant. there is not as sharp a demarcation between cyclical and structural problems as is sometimes suggested. monetary policies directed toward achieving the statutory dual mandate of maximum employment and price stability can help reduce underemployment associated with low aggregate demand. and, to the degree that monetary policy can prevent cyclical phenomena such as high unemployment and low investment from becoming entrenched, it might be able to improve somewhat the potential growth rate of the economy over the medium term. 15 more generally, reducing labor market slack can help lay the foundation for a more sustained, self - reinforcing cycle of stronger aggregate demand, increased production, renewed investment, and productivity gains. similarly, a stronger labor market can provide a modest countervailing factor to income inequality trends by leading to higher wages at the bottom rungs of the wage scale. the very accommodative monetary policy of the past five years has contributed significantly to the extended, moderate recoveries of gross domestic product ( gdp ) and employment. to this point, however, there has not been a corresponding upturn in wages. to be sure, there have been notable wage increases

kazumasa iwata : the role of the price stability anchor in extricating japan from deflation summary of a speech given by mr kazumasa iwata, deputy governor of the bank of japan, at the panel discussion “ monetary policy strategies : a central bank panel ”, at the symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, 27 august 2005. * * * introduction i would like to talk about the issues relating to monetary policy strategies for the future, in the light of japan's experience in the last decade of stagnation as well as deflation, and the subsequent struggle to overcome deflation under the zero bound on the nominal interest rate. after a pause in growth triggered by the bursting of the mini - bubble in the digital electronics sector in spring 2004, japan has resumed growth exceeding the potential growth rate, with the rate of change in the consumer price index, excluding institutional and special factors such as oil, telephone charges, rice and fresh food, registering virtually zero in recent months. 1 currently we have good prospects to exit from a decade - long period of deflation. in this context, i would like to draw some lessons from previous policy developments for the future conduct of monetary policy, focusing on the role of the price stability anchor. the quantitative easing policy and the price stability anchor japan is apparently viewed as a country that has not adopted an inflation targeting policy. yet it is my personal view that japan implements implicitly a price stability target within the framework of current quantitative easing policy ( bank reserve target policy ) which was introduced in march 2001. this is primarily because of the strict observance of the commitment on the policy duration to secure price stability. the preceding " zero interest rate policy " in the period from february 1999 to august 2000 failed to bear fruit, in part due to the weak commitment on policy duration. in contrast, under the quantitative easing policy, the bank of japan clarified and strengthened the commitment on the duration of the policy by presenting in october 2003 the three conditions for ending this policy. the three conditions can be summarized by a phrase such as " stably above zero of the core consumer price index on a year - to - year basis " or " never return to deflation. " this commitment sends a signal to the market that the bank of japan finds it important to secure price stability to achieve positive inflation rates, although the numerical upper limit is not announced. 2 it serves as an anchor of price stability