A1115
Title: Estimating medium-scale new Keynesian model under the zero lower bound for Japan
Authors: Masataka Eguchi - Nagoya City University (Japan) [presenting]
Hirokuni Iiboshi - Nihon University (Japan)
Abstract: The Japanese economy has been caught in a liquidity trap where the nominal interest rate is on the zero lower bound (ZLB) since the late 1990s and has experienced prolonged stagnation accompanied by deflation. The impact of the ZLB on economic growth and inflation in Japan by estimating a medium-scale New Keynesian model with the ZLB. To this end, the OccBin and inversion filter are employed, and the model is estimated using data from 1981 to 2015, before the negative interest rate policy. The estimation results reveal that the ZLB reduced, on average, the GDP by about 1.36 percent and the price level by about 3.43 percent compared to the case without the ZLB for the Japanese economy after the 2000s.
