Focusing on policy-making under uncertainty, we analyze the Bank of Japanfs monetary policy in the early 1990s when the bubble economy collapsed. Conducting stochastic simulations with a large-scale macroeconomic model of the Japanese economy, we find that the BOJfs monetary policy at that time...

Focusing on policymaking under uncertainty, we analyze the monetary policy of the Bank of Japan (BOJ) in the early 1990s, when the bubble economy collapsed. Conducting stochastic simulations with a large- scale macroeconomic model of the Japanese economy, we find that the BOJf s monetary policy...

Reflecting recent economic developments in Japan, there is a growing interest in how monetary policy should be conducted under low inflation and nominal interest rates. Among several proposed solutions, the conventional wisdom seems to be to commit to lower future short-term nominal interest...