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Public Debt and Economic Growth in an Aging Japan

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Author Info

  • Toshihiro Ihori

    (Faculty of Economics, University of Tokyo)

  • Ryuta Ray Kato

    (Graduate School of International Relations, International Univesity of Japan)

  • Masumi Kawade

    (Faculty of Economics, Niigata University)

  • Shun-ichiro Bessho

    (Policy Research Institute, Ministry of Finance, Japanese Government)

Abstract

This@paper@examines@the@effects of the demographic change and the government debt policy in Japan on economic growth and economic welfare, particularly by taking into account the existing public pension scheme as well as national medical expenditure through the existing public health insurance, wherea computational overlapping generations model is used within a general equilibrium context. One of the main results of this paper is that the tax burden (GDP) ratio will increase up to about 36%, and the social security burden (GDP) ratio will increase up to 23.3% in 2050, even though the government tries to have a positive primary balance by 2010. The ratio of public health insurance bene?ts to GDP is expected to increase at 1% every 10years, and the ratio will be around 9.6%in 2050. The 2004 public pension reform will successfully result in a 13 point decrease in the contribution rate from 36.44% to 23.53%, and reduce the social security burden (GDP) ratio by about 8 points from 23.27% to 15.02% in 2050, compared with the benchmark case.

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Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-372.

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Length: 47 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:tky:fseres:2005cf372

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  1. Christian Broda & David E. Weinstein, 2004. "Happy News from the Dismal Science: Reassessing the Japanese Fiscal Policy and Sustainability," NBER Working Papers 10988, National Bureau of Economic Research, Inc.
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  13. Uwe E. Reinhardt, 2000. "Health Care for the Aging Baby Boom: Lessons from Abroad," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 71-83, Spring.
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  15. Kato, Ryuta, 1998. "Transition to an Aging Japan: Public Pension, Savings, and Capital Taxation," Journal of the Japanese and International Economies, Elsevier, vol. 12(3), pages 204-231, September.
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Citations

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Cited by:
  1. Ryuta Ray Kato, 2011. "The Impact of Marginal Tax Reforms on the Supply of Health Related Services in Japan," Working Papers EMS_2011_19, Research Institute, International University of Japan.
  2. Real Arai & Junji Ueda, 2012. "A Numerical Evaluation on a Sustainable Size of Primary Deficit in Japan," KIER Working Papers 823, Kyoto University, Institute of Economic Research.
  3. Toshihiro Ihori & Ryuta Ray Kato & Masumi Kawade & Shun-ichiro Bessho, 2009. "Spousal Tax Deduction, Social Security System and the Labor Supply of Japanese Married Women," Working Papers EMS_2009_15, Research Institute, International University of Japan.
  4. Muto, Ichiro & Oda, Takemasa & Sudo, Nao, 2012. "Macroeconomic Impact of Population Aging in Japan: A Perspective from an Overlapping Generations Model," MPRA Paper 42550, University Library of Munich, Germany.
  5. AFM Mohiuddin & Ryuta Ray Kato, 2009. "Trade Liberalization of the Fishery Industry of Japan," Working Papers EMS_2009_10, Research Institute, International University of Japan.
  6. 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.
  7. Ryuta Ray Kato, 2010. "Tax and Subsidy Policies for the Medical Service Sector and the Pharmaceutical Industry: A Computable General Equilibrium Approach," Working Papers EMS_2010_19, Research Institute, International University of Japan.
  8. Akira Okamoto, 2013. "Simulating Public Pension Reforms in an Aging Japan: Welfare Analysis with LSRA Transfers," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 597-632, September.
  9. Shimasawa, Manabu & Oguro, Kazumasa, 2010. "Impact of immigration on the Japanese economy: A multi-country simulation model," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 586-602, December.

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