Fiscal cost to exit quantitative easing: the case of Japan

Hiroshi Fujiki*, Hajime Tomura

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)


This paper simulates the cash flows and balance sheet of the Bank of Japan (BoJ) before and after the end of Quantitative and Qualitative Monetary Easing (QQE) under various scenarios. The simulations show that the BoJ will record significant accounting losses after the end of QQE, because the yields on Japanese government bonds (JGBs) acquired during QQE will be lower than the interest rate on excess reserves after the end of QQE. These losses are fiscal costs for the consolidated Japanese government, as they correspond to increased interest expenses to the public. The extent of the BoJ's accounting losses depends crucially on the duration of QQE and the interest-rate elasticity of banknote demand.

Original languageEnglish
Pages (from-to)1-11
Number of pages11
JournalJapan and The World Economy
Publication statusPublished - 2017 Jun 1


  • Central bank
  • Fiscal cost
  • Quantitative and Qualitative Monetary Easing
  • Quantitative easing
  • Solvency

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations


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