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...

We estimate a medium-scale DSGE model of the Japanese economy following Christiano, Eichenbaum and Evans (2005), Smets and Wouters (2003) and Levin et al. (2005). By using actual capital utilization data and modifying the formulation of utilization following Greenwood, Hercowitz and Huffmann...

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.

In this paper, we propose a new method for identifying monetary policy shocks under the non-negativity constraint on nominal short-term interest rates and use it to estimate the impact of monetary policy on the Japanese economy since the bursting of the asset bubble. Our method boasts three...

We identify a monetary policy rule that remains optimal even in the presence of the non-negativity constraint on nominal interest rates. This rule also compensates for any past shortfalls in monetary easing during the zero interest rate period.