Structure of the Forward-Looking Model of the Japanese Economy and Simulation Results

Daisuke Ishikawa, Nobutoshi Kitaura, Junji Ueda and Shintaro Nakagawa
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Daisuke Ishikawa: Senior Economist, Policy Research Institute, Ministry of Finance, Japan
Nobutoshi Kitaura: Economist, Policy Research Institute, Ministry of Finance, Japan; Former Director of Policy Evaluation Office, Ministry of Finance; Former Associate Professor, Institute of Economic Research, Kyoto University, Japan
Junji Ueda: Associate Professor, Institute of Economic Research, Kyoto University, Japan
Shintaro Nakagawa: Former Researcher, Institute of Economic Research, Kyoto University, Japan. Associate Professor, Shimonoseki City University, Japan

Public Policy Review, 2011, vol. 7, issue 2, 385-454

Abstract: In this paper, we discuss the structure of a forward-looking model of the Japanese economy, which has been jointly developed by the Institute of Economic Research, Kyoto University, and the Policy Research Institute, Ministry of Finance, and use the model to simulate policies for fiscal consolidation. In the simulation, we compared our results with those from the IMF fs MULTIMOD model (whose data and equation list are open to the public) as thoroughly as possible and verified the appropriateness of the simulation results of our macroeconomic model. The overall results are similar to those from the IMF model, and we confirmed that our model can grasp the mechanism in which an economic agent will smooth out economic activities in anticipation of any future shock.

Keywords: Dynamic optimization; policy simulation (search for similar items in EconPapers)
JEL-codes: C51 C53 E27 (search for similar items in EconPapers)
Date: 2011
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