This paper estimates a dynamic stochastic general quilibrium (DSGE) model for the Japanese economy over 1970:Q1 through 1998:Q4, which is prior to the period of zero interest rate bound. More specifically, the New-Keynesian DSGE model with several frictions such as stickiness in price and wage,...

Most macroeconomic analyses rely on either an infinite horizon model (in which people care about their descendants as much as they care about themselves) or an overlapping generations model (in which people don't care about their descendants at all). But if we are interested in fiscal policies...