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Fiscal Projections and Debt Sustainability in Japan

Author

Listed:
  • Mitsuru Katagiri
  • Junko Koeda
  • Hiroaki Miyamoto
  • Makoto Nirei
  • Takashi Unayama

Abstract

Japan's government debt, currently at approximately 250% of GDP, is the highest among the advanced economies and raises significant concerns about fiscal sustainability. This paper employs debt sustainability analysis to assess Japan's long‐term fiscal sustainability given a backdrop of rising inflation and potential increases in interest rates because of the normalization of monetary policy. Our baseline scenario projects a persistent primary deficit leading to a divergent debt‐to‐GDP trajectory, underscoring the need for some fiscal adjustments.

Suggested Citation

  • Mitsuru Katagiri & Junko Koeda & Hiroaki Miyamoto & Makoto Nirei & Takashi Unayama, 2025. "Fiscal Projections and Debt Sustainability in Japan," Asian Economic Policy Review, Japan Center for Economic Research, vol. 20(2), pages 222-232, July.
    • Handle: RePEc:bla:asiapr:v:20:y:2025:i:2:p:222-232
    DOI: 10.1111/aepr.12508
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    References listed on IDEAS

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    Cited by:

    1. Takatoshi Ito, 2025. "Understanding the Normalization of the Japanese Economy," Asian Economic Policy Review, Japan Center for Economic Research, vol. 20(2), pages 187-202, July.

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