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Fiscal Equalization in Japan: Assessment and Recommendations


  • Robin W. Boadway

    (Department of Economics, Queen's University)

  • Paul A. R. Hobson

    (Department of Economics, Acadia University)

  • Nobuki Mochida

    (Faculty of Economics, Universtiy of Tokyo)


Intergovernmental fiscal relations in Japan have been strained in recent years. This paper seeks to assess the Japanese equalization transfer in the light of the theory of fiscal federalism. This paper argues that the case for equalization lies in offsetting net fiscal benefit (NFB) differentials across jurisdictions. It has been shown that the case for equalization and its design depend on the type of public good being provided as well as the mode of finance. Moreover, where equalization is called for, its form and level can be very different depending on whether the relevant policy goal is that of fiscal equity or fiscal efficiency. Studying the institutional context, we arrive at the conclusion that the system of equalization transfers in Japan is consistent with the application of those principles.

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  • Robin W. Boadway & Paul A. R. Hobson & Nobuki Mochida, 2000. "Fiscal Equalization in Japan: Assessment and Recommendations," CIRJE F-Series CIRJE-F-94, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2000cf94

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    1. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-633, November.
    2. James M. Buchanan, 1952. "Federal Grants and Resource Allocation: A Reply," Journal of Political Economy, University of Chicago Press, vol. 60, pages 536-536.
    3. Deepak Lal (ed.), 1992. "Development Economics," Books, Edward Elgar Publishing, volume 0, number 566.
    4. James M. Buchanan, 1952. "Federal Grants and Resource Allocation," Journal of Political Economy, University of Chicago Press, vol. 60, pages 208-208.
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