Japan: Selected Issues

International Monetary Fund

No 2013/254, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper examines implications for long-term bond yields in case of Japan. The analysis finds that so far, upward pressure on interest rates from high public debt has been offset by domestic factors, including a stable investor base with a preference for safe assets. As these effects could decline with population aging, yields could rise unless reforms are implemented to stimulate growth and reduce the public debt-to-GDP ratio. In such a scenario, long-term Japanese government bond rates would remain relatively low and stable. The paper also analyzes to what extent rising health care spending poses a fiscal risk to Japan’s economy.

Keywords: ISCR; CR; bank; GDP; Japan; worker; inflation dynamics; labor market duality; copayment rate; BoJ purchase; Japanese bank; Labor markets; Long term interest rates; Aging; Employment protection; Global; Asia and Pacific (search for similar items in EconPapers)
Pages: 61
Date: 2013-08-05
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Citations: View citations in EconPapers (1)

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