On Financing Retirement, Health, and Long-term Care in Japan

Author/Editor:

Ellen R. McGrattan ; Kazuaki Miyachi ; Adrian Peralta-Alva

Publication Date:

November 28, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Japan faces the problem of how to finance retirement, health, and long-term care expenditures as the population ages. This paper analyzes the impact of policy options intended to address this problem by employing a dynamic general equilibrium overlapping generations model, specifically parameterized to match both the macroeconomic and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers a better macroeconomic performance and higher welfare for most individuals than other financing options, including those of raising social security contributions, debt financing, and a uniform increase in health and long-term care copayments.

Series:

Working Paper No. 18/249

Subject:

English

Publication Date:

November 28, 2018

ISBN/ISSN:

9781484384718/1018-5941

Stock No:

WPIEA2018249

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

44

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