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

Ellen McGrattan, Kazuaki Miyachi and Adrian Peralta-Alva ()

No 586, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: Japan is facing the problem of how to finance retirement, health care, 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 macro- and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers better macroeconomic performance and higher welfare for most individuals relative to other financing options, including raising social security contributions, debt financing, and a uniform increase in health care and long-term care copayments.

Keywords: Taxation; Aging; Health care; Japan; Retirement (search for similar items in EconPapers)
JEL-codes: E62 H51 H55 I13 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2019-06-07
New Economics Papers: this item is included in nep-age, nep-dge, nep-ias, nep-mac and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:586

DOI: 10.21034/sr.586

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