EconPapers    
Economics at your fingertips  
 

Dynamic analysis of budget policy rules in Japan

Koichi Futagami () and Kunihiko Konishi

Journal of the Japanese and International Economies, 2018, vol. 50, issue C, 72-88

Abstract: We construct an endogenous growth model with public capital and endogenous labor supply and examine quantitatively the welfare effects of fiscal consolidation on the Japanese economy. We consider two modes of fiscal consolidation: the adjustment to a new lower target of the debt-to-GDP and deficit-to-GDP ratios. We find that the debt and deficit reduction rules based only on government consumption and investment expenditure cuts improve households’ welfare. This improvement in households’ welfare becomes large as the speed of fiscal consolidation rises. Further, reductions in the target debt-to-GDP or deficit-to-GDP ratio generate larger welfare gains. We also discuss the welfare effects of fiscal consolidation with tax increases and transfer payment decreases.

Keywords: Fiscal consolidation; Endogenous growth; Welfare (search for similar items in EconPapers)
JEL-codes: E62 H54 H60 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158318300716
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Dynamic Analysis of Budget Policy Rules in Japan (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:50:y:2018:i:c:p:72-88

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-10-10
Handle: RePEc:eee:jjieco:v:50:y:2018:i:c:p:72-88