Public Debt and Economic Growth in an Aging Japan

Toshihiro Ihori, Ryuta Kato, Masumi Kawade () and Shun-ichiro Bessho
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Toshihiro Ihori: Faculty of Economics, University of Tokyo

No CIRJE-F-372, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper examines the effects of the demographic change and the government debt policy in Japan on economic growth and economic welfare, particularly by taking into account the existing public pension scheme as well as national medical expenditure through the existing public health insurance, wherea computational overlapping generations model is used within a general equilibrium context. One of the main results of this paper is that the tax burden (GDP) ratio will increase up to about 360x25, and the social security burden (GDP) ratio will increase up to 23.30x25 in 2050, even though the government tries to have a positive primary balance by 2010. The ratio of public health insurance benefits to GDP is expected to increase at 10x25 every 10years, and the ratio will be around 9.6%in 2050. The 2004 public pension reform will successfully result in a 13 point decrease in the contribution rate from 36.440x25 to 23.530x25, and reduce the social security burden (GDP) ratio by about 8 points from 23.270x25 to 15.020x25 in 2050, compared with the benchmark case.

Pages: 47 pages
Date: 2005-09
New Economics Papers: this item is included in nep-dge, nep-ias, nep-pbe and nep-sea
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Citations: View citations in EconPapers (15)

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http://www.cirje.e.u-tokyo.ac.jp/research/dp/2005/2005cf372.pdf (application/pdf)

Related works:
Working Paper: Public Debt and Economic Growth in an Aging Japan (2006)
Working Paper: Public Debt and Economic Growth in an Aging Japan (2005)
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