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Fiscal Sustainability under an Aging Population in Japan: A Financial Market Perspective

Author

Listed:
  • Takashi Oshio

    (Hitotsubashi University)

  • Oguro

    (Hosei University)

Abstract

In this short paper, we investigate fiscal sustainability under an aging population in Japan from a financial market perspective. First, we focus on self-fulfilling expectations in the bond market and point out the risks of a fiscal collapse triggered by a change in market expectations. Second, we examine the extent to which market participants require the government to improve its fiscal position. Further, we discuss the possibility of lower economic growth accompanied with a high level of government debt, based on relationships observed across countries.

Suggested Citation

  • Takashi Oshio & Oguro, 2013. "Fiscal Sustainability under an Aging Population in Japan: A Financial Market Perspective," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 735-750, September.
    • Handle: RePEc:mof:journl:ppr023g
    as

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    File URL: http://warp.da.ndl.go.jp/info:ndljp/pid/11217434/www.mof.go.jp/english/pri/publication/pp_review/ppr023/ppr023g.pdf
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    References listed on IDEAS

    as
    1. Checherita-Westphal, Cristina & Rother, Philipp, 2010. "The impact of high and growing government debt on economic growth: an empirical investigation for the euro area," Working Paper Series 1237, European Central Bank.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    3. Carmen M. Reinhart & Vincent R. Reinhart & Kenneth S. Rogoff, 2012. "Public Debt Overhangs: Advanced-Economy Episodes since 1800," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 69-86, Summer.
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    Cited by:

    1. Magazzino, Cosimo & Brady, Gordon L. & Forte, Francesco, 2019. "A panel data analysis of the fiscal sustainability of G-7 countries," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    2. Chen, Shyh-Wei & Wu, An-Chi, 2018. "Is there a bubble component in government debt? New international evidence," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 467-486.
    3. Kateřina GAWTHORPE, 2022. "Population ageing and sustainable fiscal policy in Czechia," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 13, pages 81-105, June.
    4. Yugo Koshima, 2019. "Japan's Public Sector Balance Sheet," IMF Working Papers 2019/212, International Monetary Fund.
    5. Shiro Armstrong & Tatsuyoshi Okimoto, 2016. "Fiscal Sustainability in Japan," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(2), pages 235-243, May.

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