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Fiscal Policy Options for Japan


  • Olivier J Blanchard

    () (Peterson Institute for International Economics)

  • Takeshi Tashiro

    () (Peterson Institute for International Economics)


For many years, the Japanese government has promised an eventual return to primary budget surpluses, but it has not delivered on these promises. Its latest goal is to return to primary balance by 2025. Blanchard and Tashiro, however, argue that, in the current economic environment in Japan, primary deficits may be needed for a long time, because they may be the best tool to sustain demand and output, alleviate the burden on monetary policy, and increase future output. What primary deficits are used for, however, is equally important, and the Japanese government should put them to better use. The authors recommend that, given Japan’s aging population, the government should spend on measures aimed at increasing fertility—and by implication population and output growth—which are likely to more than pay for themselves.

Suggested Citation

  • Olivier J Blanchard & Takeshi Tashiro, 2019. "Fiscal Policy Options for Japan," Policy Briefs PB19-7, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb19-7

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    Cited by:

    1. Saito, Makoto, 2020. "Long-run mild deflation under fiscal unsustainability in Japan," Discussion Paper Series 703, Institute of Economic Research, Hitotsubashi University.
    2. Saito, Makoto, 2020. "Public Bonds as Money Substitutes at Near-Zero Interest Rates: Disequilibrium Analysis of the Current and Future Japanese Economy," Discussion Paper Series 714, Institute of Economic Research, Hitotsubashi University.
    3. M. Ayhan Kose & Franziska Ohnsorge & Naotaka Sugawara, 2020. "Benefits and Costs of Debt: The Dose Makes the Poison," Koç University-TUSIAD Economic Research Forum Working Papers 2006, Koc University-TUSIAD Economic Research Forum.

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