This book is a revised and updated version of my doctoral research at the Faculty of Economics and Econometrics of the Free University of Amsterdam. During my time there I was also affiliated with the Tinbergen Institute. I am grateful to both institutions for giving me the opportunity to conduct this research, which was finalised while I was on the staff of De Nederlandsche Bank, before my subsequent move to the European Central Bank. Needless to say, my views in no way represent those of either De Nederlandsche Bank or the European Central Bank.
I acknowledge, with gratitude, the support and assistance of many individuals in conducting my research over the years. First and foremost, I am most grateful to Hans Visser for his patience and confidence. It takes a lot of courage for a supervisor to approve a research proposal that aims at investigating empirically a topic of such a delicate nature as informality in monetary policy. I am also deeply indebted to Juro Teranishi for accepting an unknown, 'aggressive' Dutchman as his research student. His advice and teaching substantially enhanced my knowledge of Japan and the Japanese economy, and the wonderful parties that he and his wife gave increased my appreciation of the delights of sake. Otto Swank's creative thinking in times of academic trouble and his useful criticism helped in many ways to improve my research. I am also grateful to Age Bakker, Sylvester Eijffinger, Hans Eijgenhuijsen and Joop Stam for reading the original final draft.
During my three years in Japan, several institutions were of great importance to my research. The teachers of the Japanese Language Course at Tsukuba University helped me to acquire a basic knowledge of Japanese. The seminars at the Institute of Economic Research of Hitotsubashi University were excellent opportunities to test my ideas. I would like to thank the participants for their comments, in particular Hidekazu Eguchi, Kyoji Fukao, Shin-Ichi Fukuda and Juro Teranishi. For almost two years the Institute for Monetary and Economic Studies of the Bank of Japan provided an excellent research environment. I cherish the memories of long discussions with staff members, visiting scholars and other research