Hirose, Yasuo; Inoue, Atsushi - Institute for Monetary and Economic Studies, Bank of Japan - 2014
This paper examines how and to what extent parameter estimates can be biased in a dynamic stochastic general equilibrium (DSGE) model that omits the zero lower bound (ZLB) constraint on the nominal interest rate. Our Monte Carlo experiments using a standard sticky-price DSGE model show that no...