A Bank of Japan paper published in March says the use of a spread-adjusted Taylor rule is a more suitable response to adverse shocks than capital injections.

Naohisa Hirakata, Nao Sudo and Kozo Ueda, the paper's authors, use a variant of the financial accelerator model to evaluate the effects of the spread-adjusted Taylor rules – a monetary policy rule that reduces the policy rate when the spread widens – and capital injection policies in response to adverse shocks to the economy.

Hirakata, Sudo