This paper applies Bayesian estimation to an open-economy Dynamic Stochastic General Equilibrium (DSGE) model of Japan, to assess the effects of expanding government debt on interest rates, real exchange rate dynamics, and real sector performance. We find that the emergence of even a small risk...

This paper examines the relation between alternative objectives for interest rate rules in the conduct of monetary policy, and the volatility of asset prices, the exchange rate, and the M2 monetary aggregate, as well as output and inflation. We make use of a small econometric model with...

This paper uses linear and nonlinear neural network regime-switching (NNRS) models to decipher the message in Japanese deflation dynamics and thus identify the channels through which Japan's economy can escape its deflationary spiral. The NNRS model is superior to a linear model with respect to...