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The Japanese Economic Model (JEM)

  • Fujiwara, Ippei

    (Bank of Japan)

  • Hara, Naoko

    (Bank of Japan)

  • Hirose, Yasuo

    (Johns Hopkins U)

  • Teranishi, Yuki

    (Columbia U)

In this paper, we set out the Japanese Economic Model (JEM), a large-scale macroeconomic model of the Japanese economy. Although the JEM is a theoretical model designed with a view to overcoming the Lucas ( 1976) critique of traditional large-scale macroeconomic models, it can also be used for both projection and simulation analysis. This is achieved by embedding a mechanism within which "short-run dynamics," basically captured by a vector autoregression model, eventually converge to a "short-run equilibrium," which is defined using a dynamic general equilibrium-type model.

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Article provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.

Volume (Year): 23 (2005)
Issue (Month): 2 (May)
Pages: 61-142

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Handle: RePEc:ime:imemes:v:23:y:2005:i:2:p:61-142
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