The Sustainability of Budget Deficit in Japan (Japanese)
After overviewing the performance of the Japanese economy since the end of the bubble era of the late 1980s, we estimate the potential growth rate of Japan by using a production function for its economy. We conclude that the potential growth rate is only about 0.5 % due to the rapidly declining working-age population. Based on this estimate, we then provide a few scenarios for the future path of the debt-to-GDP ratio. We found that it is necessary to raise the consumption tax rate from the current 5% to at least 25% to stabilize the debt-to-GDP ratio. We also note that the net interest payments are likely to rise very rapidly in the near future because the government has depleted the benefit of declining interest rates since the 1990s. In the appendix, we analyze the effects of various monetary policy measures designed to stimulate the weak economy.
|Date of creation:||Jun 2012|
|Contact details of provider:|| Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901|
Web page: http://www.rieti.go.jp/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:eti:rdpsjp:12018. 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: (KUMAGAI, Akiko)
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.