The Economist describes how "a few brave economists believe, to the contrary, that higher interest rates would actually encourage (Japanese)households to spend more, not less."
I thought the most interesting piece of information from that story was the fact that personal savings rates in Japan have actually been falling essentially since the ZIRP was put into place("the sharp fall in the saving rate during the long period of low interest rates, from 14% of income in 1993 to 3% last year. (Although Japanese households have a massive stock of saving, their saving rate out of new income is now low.") I don't think I've seen that fact mentioned often in the financial media. I think this shows that the Japanese households have been responding to interest rate policy as one would expect. It also shows that the interest rate policy has been biased toward supporting the export markets. I don't see that as necessarily unwise since the BoJ is looking at the same demographic projections that we are and probably expects that since domestic markets will shrink, it is better to focus on export industries.
The article makes a persuasive case for raising rates as far as how that would effect exporters, but ignores the demographic situation when it talks about what the effect on the consumer will be. I think that if rates were raised, that wouldn't necessarily increase personal saving, as the retiring Japanese are going to need to spend what they've saved to support themselves. Younger Japanese might save more, but the large mass of older Japanese are reaching that point where they have to stop saving and start spending.
The article mentions the higher cost of government debt briefly; I think that would be one of the biggest problems with raising rates. Japan's public debt is one of the world's largest, so that higher interest cost might not necessarily be offset by increased GDP(particularly in light of the shrinking consumer base).