We estimate a medium-scale dynamic stochastic general equilibrium model of the Japanese economy following Christiano et al. [Christiano, L., Eichenbaum, M., Evans, C., 2005. Nominal rigidities and the dynamic effects of a shock to monetary policy. J. Polit. Economy 113 (1), 1-45]. By using...

This paper demonstrates that, even in the presence of a zero lower bound on nominal interest rates, central banks can eliminate a deflationary trap by the conduct of interest rate rules that have superinertia.