active regime decline more than those under the passive regime. Their standard deviations under the active regime are smaller than those under the passive regime. From this table, we can also explicitly observe the definite discrepancy between stochastic expectations and perfect foresight in all three variables.

Figures 8 (a) and (b) illustrate the intuitive interpretation of the simulation results of Table 2. In the case of the absence of the ZLB, as shown in Figure 8 (a), the distribution of the nominal interest rate under the active regime (the striped shaded area) is wider than that under the passive regime (the dotted shaded area). This results in the distribution of the output and inflation under the active regime (the striped shaded area) being narrower than that under the passive regime (the dotted shaded area). The means of these three variables are equivalent to their steady states fixed as the zero value because these three distributions are symmetrical under both regimes. On the other hand, in the case with the presence of the ZLB, as shown in Figure 8 (b), the distributions of the nominal interest rate under both regimes are truncated due to the ZLB constraint. In particular, the area truncated under the active regime (the striped shaded area) is bigger than that under the passive one (the dotted shaded area). This indicates that the means of the nominal interest rates move away from their steady states (zero value) and rise positively. The upward size of the mean under the active regime (dotted line) is bigger than that of the mean under the passive one (solid line). An increase in the means of the nominal rate, in particular under the active regime (dotted line), makes the means of the output and inflation decrease. In addition, the truncated distributions of the nominal interest rate under both regimes result in changing distributions of output and inflation to asymmetry with fat tails in the negative area. In this way, different regimes induce different expected values under the ZLB. It suggests that a passive policy with a bad reputation has a chance to gain a good evaluation as the effective policy lifting up the output and inflation in a situation of deep deflation and that it might be a candidate for an exit strategy from the zero interest rate policy.

In Figures 9 (a) and (b), artificial data conditional on the specified policy regimes generated by Monte Carlo simulations are depicted by distinguishing them according to the presence or the absence of the ZLB, respectively. The same random seed is adopted in panels (a) and (b) to compare the effect of the ZLB constraint, so that the same structural shocks determine the endogenous variables in both graphs. The fluctuations of the variables under the passive regime (the dashed line) have bigger swings than those under the active regime (the solid line) in the case of the absence of the ZLB, as in panel (a). In contrast, positive demand shocks make the reactions of these variables appear as above, whereas negative big shocks cause large declines in these variables, regardless of the policy regimes. The size of decline is bigger in panel (b) than in panel (a); for example, period 80 through 90. As such, the effects of negative shocks on an economy do not depend on the monetary policy regime that is adopted.