Advanced Search
MyIDEAS: Login to save this article or follow this journal

Change in the Flow of Funds and the Fiscal Rules Needed for Fiscal Stabilization

Contents:

Author Info

  • Naoyuki Yoshino

    (Professor, Faculty of Economics, Keio University)

  • Tetsuro Mizoguchi

    (Assistant Professor, Faculty of Economics and Business Administration, Reitaku University)

Registered author(s):

    Abstract

    Here we explain the features of the flow of funds in Japan across time by using the flow-of-funds table. We prove that the volume of the flow of funds has decreased in various sectors compared with the boom period of the 1980s. Especially in recent years, an increased volume of corporate savings, thanks to an increase in the overseas income balance, has been deposited as liquid savings and used to purchase government bonds through financial institutions. On the other hand, the volume of the flow of funds from financial institutions to corporate investments has reduced dramatically recently. We then move on to focus on the differences between the Greek and Japanese government bond markets. Although Japan's government debt ratio to GDP is bigger than that of Greece, the Japanese government bond market has remained stable. We take note of the demand side of government debt, and explain the differences between the Japanese government bond market, which enjoys a big demand from the domestic financial institutions and investors, and the Greek one, which relies heavily upon foreign investors for demand. We also explain the difference in the stabilizing measures of government bond markets between the two countries by using demand-side analysis. We point out that the Domar condition, which has so far led the discussion about the stabilization of government bond markets, was derived only from the supply-side analysis of government bonds, and thus does not always prove to be valid. Instead, we derive the stabilizing conditions for government bond markets from a model which considers government bond demand. We also present some rules for fiscal stabilization and explain the fiscal rules corresponding to Taylor's rule for monetary policy. Finally, we conclude that the issuance of a large volume of debt-covering government bonds should be restrained, and that Japan's funds should be guided to contribute to the accumulation of private capital stock for the recovery of the growth of the Japanese economy, and we conduct model analysis regarding its appropriate levels.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.mof.go.jp/english/pri/publication/pp_review/ppr020/ppr020c.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Policy Research Institute, Ministry of Finance Japan in its journal Public Policy Review.

    Volume (Year): 9 (2013)
    Issue (Month): 1 (January)
    Pages: 51-70

    as in new window
    Handle: RePEc:mof:journl:ppr020c

    Contact details of provider:
    Email:
    Web page: http://www.mof.go.jp/pri/
    More information through EDIRC

    Related research

    Keywords: Government Bond Markets; Fiscal Rules; Fiscal Stabilization;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Masaya Sakuragawa & Kaoru Hosono, 2010. "Fiscal Sustainability Of Japan: A Dynamic Stochastic General Equilibrium Approach," The Japanese Economic Review, Japanese Economic Association, vol. 61(4), pages 517-537, December.
    2. Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
    3. PAUL D. McNELIS & NAOYUKI YOSHINO, 2012. "Macroeconomic Volatility Under High Accumulation Of Government Debt: Lessons From Japan," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 15(su), pages 1250057-1-1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:mof:journl:ppr020c. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Policy Research Institute).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.