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The implications of a graying Japan for government policy

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  • Braun, R. Anton
  • Joines, Douglas H.

Abstract

Japan is in the midst of a demographic transition that is both rapid and large by international standards. As recently as 1990 Japan had the youngest population among the Group of 6 large, developed countries. However, the combined effects of aging of the baby-boomer generation and low fertility rates have produced very rapid aging. Japan now finds itself with the oldest population among the Group of 6 and its population will continue to age at a rapid pace in future years. Aging is already placing a burden on government finances and Japan׳s ability to confront the negative fiscal implications of future aging is constrained by its very high debt–GDP ratio. We find that Japan faces a severe fiscal crisis if remedial action is not undertaken soon and analyze alternative strategies for correcting Japan׳s fiscal imbalances.

Suggested Citation

  • Braun, R. Anton & Joines, Douglas H., 2015. "The implications of a graying Japan for government policy," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 1-23.
    • Handle: RePEc:eee:dyncon:v:57:y:2015:i:c:p:1-23
    DOI: 10.1016/j.jedc.2015.05.005
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    More about this item

    Keywords

    Fiscal policy; Demographics; Aging; Japan;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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