Fiscal Remedies for Japan's Slump

Laurence Ball

No 11374, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper asks how a fiscal expansion would affect Japan. It uses a textbook-style macro model calibrated to fit the Japanese economy. According to the results, Japan's output slump would be ended by a fiscal transfer of 6.6% of GDP. This policy raises the debt-income ratio in the short run, but it reduces this ratio in the long run through higher inflation and tax revenue. The financing of the transfer -- bonds or money -- affects debt in the short run but not the long run.

JEL-codes: E3 E6 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-mac and nep-sea
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Published as Fiscal Remedies for Japan's Slump , Laurence M. Ball. in Monetary Policy with Very Low Inflation in the Pacific Rim , Ito and Rose. 2006

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Chapter: Fiscal Remedies for Japan's Slump (2006)
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