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The implications of a graying Japan for government policy

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  • Braun, R. Anton
  • Joines, Douglas H.

Abstract

Japan is in the midst of a demographic transition that is both rapid and large by international standards. As recently as 1990 Japan had the youngest population among the Group of 6 large, developed countries. However, the combined effects of aging of the baby-boomer generation and low fertility rates have produced very rapid aging. Japan now finds itself with the oldest population among the Group of 6 and its population will continue to age at a rapid pace in future years. Aging is already placing a burden on government finances and Japan׳s ability to confront the negative fiscal implications of future aging is constrained by its very high debt–GDP ratio. We find that Japan faces a severe fiscal crisis if remedial action is not undertaken soon and analyze alternative strategies for correcting Japan׳s fiscal imbalances.

Suggested Citation

  • Braun, R. Anton & Joines, Douglas H., 2015. "The implications of a graying Japan for government policy," Journal of Economic Dynamics and Control, Elsevier, vol. 57(C), pages 1-23.
  • Handle: RePEc:eee:dyncon:v:57:y:2015:i:c:p:1-23
    DOI: 10.1016/j.jedc.2015.05.005
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    References listed on IDEAS

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    Cited by:

    1. Heer, Burkhard & Polito, Vito & Wickens, Michael R., 2017. "Population Aging, Social Security and Fiscal Limits," CEPR Discussion Papers 11978, C.E.P.R. Discussion Papers.
    2. repec:eee:jjieco:v:46:y:2017:i:c:p:17-26 is not listed on IDEAS
    3. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2017. "Welfare effects of fiscal policy in reforming the pension system," GRAPE Working Papers 11, GRAPE Group for Research in Applied Economics.
    4. repec:spr:soinre:v:135:y:2018:i:2:d:10.1007_s11205-016-1503-2 is not listed on IDEAS
    5. Christine Ma & Chung Tran, 2016. "Fiscal Space under Demographic Shift," ANU Working Papers in Economics and Econometrics 2016-642, Australian National University, College of Business and Economics, School of Economics.
    6. Kitao, Sagiri, 2015. "Pension reform and individual retirement accounts in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 111-126.
    7. Braun, R. Anton & Nakajima, Tomoyuki, 2016. "Uninsured risk, stagnation, and fiscal policy," FRB Atlanta Working Paper 2016-4, Federal Reserve Bank of Atlanta, revised 01 Mar 2016.
    8. repec:eee:hapoch:v1_713 is not listed on IDEAS
    9. Nakajima, Tomoyuki & Takahashi, Shuhei, 2017. "The optimum quantity of debt for Japan," Journal of the Japanese and International Economies, Elsevier, vol. 46(C), pages 17-26.
    10. repec:eee:macchp:v2-2493 is not listed on IDEAS
    11. repec:red:issued:16-328 is not listed on IDEAS
    12. Ichiro Muto & Takemasa Oda & Nao Sudo, 2016. "Macroeconomic Impact of Population Aging in Japan: A Perspective from an Overlapping Generations Model," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 408-442, August.
    13. KITAO Sagiri, 2016. "Policy Uncertainty and the Cost of Delaying Reform: A case of aging Japan," Discussion papers 16013, Research Institute of Economy, Trade and Industry (RIETI).
    14. repec:eee:hapoch:v1_179 is not listed on IDEAS
    15. repec:eee:eecrev:v:100:y:2017:i:c:p:428-462 is not listed on IDEAS
    16. Hirofumi Kurokawa & Tomoharu Mori & Fumio Ohtake, 2016. "A Choice Experiment on Taxes: Are Income and Consumption Taxes Equivalent?," ISER Discussion Paper 0966, Institute of Social and Economic Research, Osaka University.
    17. Jung, Juergen & Tran, Chung & Chambers, Matthew, 2017. "Aging and health financing in the U.S.: A general equilibrium analysis," European Economic Review, Elsevier, vol. 100(C), pages 428-462.
    18. repec:eee:japwor:v:42:y:2017:i:c:p:12-22 is not listed on IDEAS

    More about this item

    Keywords

    Fiscal policy; Demographics; Aging; Japan;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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