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The Fiscal Stance in Japan: A Model-based Analysis

Author

Listed:
  • Jean-Marc Fournier
  • Takuma Hisanaga
  • Anh D. M. Nguyen

Abstract

This paper assesses Japan’s fiscal stance in the past and the future with a stochastic structural model called the Buffer-Stock Model of the Government. Our retrospective analysis suggests that the fiscal stance in the 1990s and the early 2000s was overall looser than the model recommendations. As for the future, the model advises the near-term fiscal policy to be supportive with a view to narrowing the output gap and minimizing hysteresis, while recommending a fiscal consolidation over the medium-term at a gradual pace.

Suggested Citation

  • Jean-Marc Fournier & Takuma Hisanaga & Anh D. M. Nguyen, 2022. "The Fiscal Stance in Japan: A Model-based Analysis," IMF Working Papers 2022/164, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/164
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=522483
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    Cited by:

    1. Alberola, Enrique & Cheng, Gong & Consiglio, Andrea & Zenios, Stavros A., 2023. "Unconventional monetary policy and debt sustainability in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 69(C).

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