A numerical analysis of Japan's fiscal sustainability in a simple OLG model

Real Arai and Masahiko Nakazawa

Applied Economics Letters, 2014, vol. 21, issue 17, 1194-1197

Abstract: We investigate the size of primary balance that can be sustained and the change in public debt and physical capital under transition dynamics in the Japanese economy. For our investigation, we construct a simple overlapping generations model. We find that a large primary surplus, 13.8-18.7% of GDP, is needed to prevent the public debt-to-GDP ratio from diverging infinitely. We also show that even if the large primary surplus can be maintained, the Japanese economy faces a sharp reduction in physical capital from 191 to 70.0% of GDP on the transition path.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2014.916382 (text/html)
Access to full text is restricted to subscribers.

Related works:
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:taf:apeclt:v:21:y:2014:i:17:p:1194-1197

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2014.916382

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().