To understand how the macro economy evolves, the central bank has two options in choosing how to estimate the economic model against actual data: one is to estimate each sector of the model piece-by-piece, and the other is to estimate the whole model altogether. This paper demonstrates the...

This paper quantitatively evaluates the relative importance of the efficiency and stabilization effects of monetary policy. While maximum efficiency in the spirit of Friedman advocates long-run deflation so that the nominal interest rate is zero, business cycle consideration requires positive...