A Survey of Fiscal Sustainability and Economic Growth (Japanese)
AbstractJapan's public debt is increasing exponentially, and it is a primary policy objective to restore its sustainability. In this paper, I survey the existing research on the sustainability of the public debt in Japan and find that it might be necessary either to increase the consumption tax rate by 30% or implement a systematic fiscal consolidation plan lasting more than 100 years. Furthermore, I survey the research on the "public debt overhang," which shows that the economic growth rate decreases by about 1% if the public debt exceeds 90% of the gross domestic product (GDP). I also examine theoretical explanations of the public debt overhang. These findings indicate that restoring the sustainability of the public debt can enhance long-term economic growth.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Policy Discussion Papers (Japanese) with number 13004.
Length: 24 pages
Date of creation: Mar 2013
Date of revision:
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Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-06 (All new papers)
- NEP-FDG-2013-04-06 (Financial Development & Growth)
- NEP-PBE-2013-04-06 (Public Economics)
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