Advanced Search
MyIDEAS: Login to save this paper or follow this series

Restoring Japan's Fiscal Sustainability

Contents:

Author Info

  • Randall S. Jones
  • Satoshi Urasawa
Registered author(s):

    Abstract

    With gross government debt surpassing 200% of GDP, Japan’s fiscal situation is in uncharted territory. In addition to robust nominal GDP growth, correcting two decades of budget deficits requires a large and sustained fiscal consolidation based on a detailed and credible multi-year plan that includes measures to control spending and raise revenue. On the spending side, reforms to contain ageing-related outlays are the priority, while the consumption tax should be the main source of additional revenue, given that its impact on economic activity is less negative than other taxes. The plan should target a primary budget surplus large enough to stabilise the public debt ratio by 2020. The fiscal policy framework should be improved to help reinforce confidence in Japan's fiscal position and prevent a run-up in interest rates. Higher consumption taxes should be accompanied by well-targeted social spending, including the introduction of an earned income tax credit, to prevent a rise in inequality and poverty. This Working Paper relates to the 2013 OECD Economic Survey of Japan (www.oecd.org/eco/surveys/japan) Rétablir la viabilité des finances publiques au Japon Avec une dette publique brute dépassant 200 % du PIB, les finances publiques japonaises sont en territoire inconnu. Outre une forte croissance du PIB nominal, il faudra, pour remédier à deux décennies de déficit budgétaire, un assainissement important et soutenu des finances publiques dans le cadre d’un plan pluriannuel détaillé et crédible qui comprenne des mesures visant à limiter les dépenses et accroître les recettes. S’agissant des dépenses, la priorité est donnée aux réformes destinées à contenir les dépenses liées au vieillissement, et l’impôt sur la consommation devra constituer la principale source de recettes supplémentaires puisqu’il a, sur l’activité économique, une incidence moins négative que les autres impôts. Le plan devra viser un excédent budgétaire primaire suffisant pour stabiliser le ratio d’endettement d’ici 2020. Le cadre de la politique budgétaire devra être amélioré pour aider à renforcer la confiance dans les finances publiques japonais et éviter une remontée rapide des taux d’intérêt. La hausse de l’impôt sur la consommation devra s’accompagner de dépenses sociales bien ciblées, notamment d’une réduction de la fiscalité dur travail, pour empêcher une aggravation des inégalités et de la pauvreté. Ce Document de travail a trait à l’Étude économique de l’OCDE du Japon, 2013 (www.oecd.org/eco/etudes/japon).

    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://dx.doi.org/10.1787/5k46cvtkbf33-en
    Download Restriction: no

    Bibliographic Info

    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1050.

    as in new window
    Length:
    Date of creation: 23 May 2013
    Date of revision:
    Handle: RePEc:oec:ecoaaa:1050-en

    Contact details of provider:
    Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
    Phone: 33-(0)-1-45 24 82 00
    Fax: 33-(0)-1-45 24 85 00
    Email:
    Web page: http://www.oecd.org
    More information through EDIRC

    Related research

    Keywords: fiscal sustainability; social security; consumption tax; poverty; public debt; Abenomics; debt dynamics; Japanese economy; inequality; reconstruction spending; fiscal policy; pensions; fiscal consolidation; fiscal management strategy; independent fiscal councils; conseils budgétaires indépendants; stratégie de gestion budgétaire; viabilité budgétaire; assainissement budgétaire; Abenomics; dynamique de la dette; dépenses de reconstruction; dette publique; politique budgétaire; pauvreté; inégalité; impôts sur la consommation; sécurité sociale; économie japonaise;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    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. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    2. Balázs Égert, 2012. "Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality?," OECD Economics Department Working Papers 993, OECD Publishing.
    3. Kenichiro Kashiwase & Masahiro Nozaki & Kiichi Tokuoka, 2012. "Pension Reforms in Japan," IMF Working Papers 12/285, International Monetary Fund.
    4. Takeo Hoshi & Takatoshi Ito, 2012. "Defying Gravity: How Long Will Japanese Government Bond Prices Remain High?," NBER Working Papers 18287, National Bureau of Economic Research, Inc.
    5. Christopher Heady & Åsa Johansson & Jens Arnold & Bert Brys & Laura Vartia, 2009. "Tax Policy for Economic Recovery and Growth," Studies in Economics, Department of Economics, University of Kent 0925, Department of Economics, University of Kent.
    6. Margit Molnar, 2012. "Fiscal Consolidation: Part 5. What Factors Determine the Success of Consolidation Efforts?," OECD Economics Department Working Papers 936, OECD Publishing.
    7. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.
    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:oec:ecoaaa:1050-en. 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: ().

    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.