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Local fiscal multipliers and population aging in Japan

Shun-ichiro Bessho

Japan and the World Economy, 2021, vol. 60, issue C

Abstract: This study examines how the effectiveness of fiscal policy depends on population aging. To this end, this study estimates the local fiscal multipliers in Japan. Results suggest that the estimated local fiscal multiplier on output is larger in non-aged areas than aged areas, and that the effects on the number of workers are not statistically significant in either area type. Additionally, the multipliers on private investment are only higher than one in non-aged prefectures. Results also indicate that the multiplier generated by an increase in government investment is larger than that in government consumption. These results indicate fewer slack resources in aged areas that can be mobilized in response to increased government spending.

Keywords: Fiscal policy; Local fiscal multiplier; Population aging (search for similar items in EconPapers)
JEL-codes: E62 H30 R50 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:60:y:2021:i:c:s0922142521000463

DOI: 10.1016/j.japwor.2021.101099

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