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Local fiscal multipliers and population aging in Japan

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  • Bessho, Shun-ichiro

Abstract

This study examines how the effectiveness of fiscal policy depends on population aging. To this end, this study estimates the local fiscal multipliers in Japan. Results suggest that the estimated local fiscal multiplier on output is larger in non-aged areas than aged areas, and that the effects on the number of workers are not statistically significant in either area type. Additionally, the multipliers on private investment are only higher than one in non-aged prefectures. Results also indicate that the multiplier generated by an increase in government investment is larger than that in government consumption. These results indicate fewer slack resources in aged areas that can be mobilized in response to increased government spending.

Suggested Citation

  • Bessho, Shun-ichiro, 2021. "Local fiscal multipliers and population aging in Japan," Japan and the World Economy, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:japwor:v:60:y:2021:i:c:s0922142521000463
    DOI: 10.1016/j.japwor.2021.101099
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    Cited by:

    1. Tomomi Miyazaki & Haruo Kondoh, 2022. "Effects of Monetary and Fiscal Policy Interactions on Regional Employment: Evidence from Japan," Discussion Papers 2206, Graduate School of Economics, Kobe University.
    2. Yaqun Zhang & Ying Tian, 2022. "The Relationship between Physical Activity and Depressive Symptoms in Middle-Aged and Elderly People Controlling for Demographic and Health Status Variables," Sustainability, MDPI, vol. 14(21), pages 1-12, October.
    3. Miyazaki, Tomomi & Hiraga, Kazuki & Kozuka, Masafumi, 2024. "Stock market response to public investment under the zero lower bound: Cross-industry evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).
    4. Fukuda, Shin-ichi, 2023. "Evaluation of fiscal policy using alternative GDP data in Japan," Japan and the World Economy, Elsevier, vol. 67(C).
    5. Lu, Zhenkun & Kameda, Keigo, 2024. "Impact of fiscal policies on the labor market with search friction: An estimated DSGE model for Japan," Journal of the Japanese and International Economies, Elsevier, vol. 72(C).
    6. Morita, Hiroshi, 2022. "On the relationship between fiscal multipliers and population aging in Japan: Theory and empirics," Economic Modelling, Elsevier, vol. 108(C).

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    More about this item

    Keywords

    Fiscal policy; Local fiscal multiplier; Population aging;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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