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Discretionary deficit and its effects on Japanese economy

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  • Masao Tsuri

Abstract

This paper identifies the discretionary component of Japan's public deficits, which is included in the structural component in existing work. The identification is done by collecting data and information of stimulus packages. Discretionary expenditure, discretionary revenue, and cyclical revenue are the main factors of increases in public deficits in the 1990s. The revenue side has had greater impacts on deficits than expenditure. The effects of stimulus packages are examined, using the discretionary deficits. Stimulus policies have multiplier effects, while overall public deficits have not. Results of analyses indicate that: (1) stimulus packages have economic effects, (2) they also bring fiscal deficits, thus can be additional constraints on the government budget, (3) public deficits can be eased with GDP growth if tax is returned to the previous level, (4) the public finance has a structural deficit.

Suggested Citation

  • Masao Tsuri, 2005. "Discretionary deficit and its effects on Japanese economy," Applied Economics, Taylor & Francis Journals, vol. 37(19), pages 2239-2249.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:19:p:2239-2249
    DOI: 10.1080/00036840500293870
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    References listed on IDEAS

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    1. Kamada, Koichiro & Masuda, Kazuto, 2001. "Effects of Measurement Error on the Output Gap in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(2), pages 109-154, May.
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    Cited by:

    1. Montes, Gabriel Caldas & de Hollanda Lima, Natalia Teixeira, 2022. "Discretionary fiscal policy, fiscal credibility and inflation risk premium," The Quarterly Review of Economics and Finance, Elsevier, vol. 85(C), pages 208-222.
    2. Gabriel Caldas Montes & Paulo henrique Luna, 2021. "Effects of discretionary fiscal policy and fiscal communication on fiscal credibility: Empirical evidence from Brazil," Economics Bulletin, AccessEcon, vol. 41(3), pages 1486-1500.
    3. Montes, Gabriel Caldas & Luna, Paulo Henrique, 2018. "Discretionary fiscal policy and disagreement in expectations about fiscal variables empirical evidence from Brazil," Economic Modelling, Elsevier, vol. 73(C), pages 100-116.
    4. Tsuchiya, Yoichi, 2016. "Assessing macroeconomic forecasts for Japan under an asymmetric loss function," International Journal of Forecasting, Elsevier, vol. 32(2), pages 233-242.
    5. Gabriel Caldas Montes & Iven Silva Valpassos, 2018. "Discretionary fiscal policy and sovereign risk," Economics Bulletin, AccessEcon, vol. 38(3), pages 1343-1365.
    6. Venturini, Fiorenza, 2016. "Are Estimates of Fiscal Multipliers Truly Reliable? Some Observations Starting from the Case of Japan," Centro Sraffa Working Papers CSWP23, Centro di Ricerche e Documentazione "Piero Sraffa".

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