The article examines how Japanese monetary policy has affected the economy since the burst of the asset bubble. The researchers developed a new method to analyze the impact of monetary policy shocks under certain constraints. They found that the effects of monetary policy on prices and output weakened in the 1990s due to various factors, including the non-negativity constraint on interest rates and issues in the banking sector. Additionally, problems with household and entrepreneur balance sheets, as well as a malfunctioning propagation mechanism in the private sector, further hindered the effectiveness of monetary policy.