Increase in Non-Ricardian Households, Monetary-Policy Posture's Changes, and Structural Shocks' Effects under OccBin Constraints in Japan

In a situation of deepening wealth maldistribution and depreciating Japanese yen, the Bank of Japan implemented unconventional monetary-easing policies during 1999q2-2023q4 to overcome economic stagnation and deflation.Here, I estimated the social-structure and policy-posture changes over 1972Q3-1999Q1 (normal regime) and 1999Q2-2023Q4 (unconventional regime) by using a New Keynesian dynamic stochastic general equilibrium (DSGE) model and derived impulse responses to fiscal/monetary-policy and productivity shocks under occasionally binding (OccBin) constraints on nominal interest rates.My analysis revealed that (1) in the second term, non-Ricardian households' share became 3.5 times that in the first term, (2) nominal interest-rate shocks lost their influences to the variations in economic variables in the second term, and (3) the differences in impulse response between the linear and piecewise-linear solutions are relatively remarkable on and through all structural shocks.