Japan's Medium: and Long-Term Fiscal Challenges
October 1, 1996
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Summary
This paper assesses the sustainability of Japan’s fiscal position. The simulations indicate that, even if the government’s pension reform plan is fully implemented, the initial budget imbalance, combined with pressures from population aging, would lead to explosive increases in government deficits and debt. Present-value calculations point to a fiscal “gap” of about 4 percent of GDP, indicating the combination of tax increases and/or spending cuts that would be required to generate a sustainable long-run fiscal position. Finally, the paper presents an illustrative package of tax and spending measures that could be implemented to close this gap.
Subject: Aging, Current spending, Expenditure, Labor, Pension reform, Pensions, Population and demographics, Public investment spending
Keywords: Aging, Current spending, debt, debt accumulation, debt stock, effect, estimate, GDP rise, Japan, Pension reform, Pensions, percent of GDP, Public investment spending, revenue effect, WP
Pages:
30
Volume:
1996
DOI:
Issue:
113
Series:
Working Paper No. 1996/113
Stock No:
WPIEA1131996
ISBN:
9781451853674
ISSN:
1018-5941
