Compared to an improvement in economic activity, the response in prices was not that substantial. This result can be interpreted that a slope of the Phillips curve during quantitative easing was relatively flat. What I have shown here is the effect of an exogenous increase in the monetary base during the estimation periods.
Yet, we should not interpret this effect as purely coming from the aspect of quantity only. Rather, we should understand this effect coming from the policy package as a whole. The package includes changes on the asset side, including an increase in JGB purchases. It also includes purchases of banks’ shareholdings, therefore containing the effect of stabilizing the financial system.