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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Daisuke Ishikawa & Nobutoshi Kitaura & Junji Ueda & Shintaro Nakagawa, 2011. "Structure of the Forward-Looking Model of the Japanese Economy and Simulation Results," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 7(2), pages 385-454, July.
    • Handle: RePEc:mof:journl:ppr014d
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    More about this item

    Keywords

    Dynamic optimization; policy simulation;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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