Economics at your fingertips  

Dynamic Analysis of Budget Policy Rules in Japan

Koichi Futagami () and Kunihiko Konishi
Additional contact information
Kunihiko Konishi: Institute of Economic Research, Kyoto University

No 18-E-3, Bank of Japan Working Paper Series from Bank of Japan

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)
New Economics Papers: this item is included in nep-mac
Date: 2018-03-12
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: 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:

Access Statistics for this paper

More papers in Bank of Japan Working Paper Series from Bank of Japan Contact information at EDIRC.
Bibliographic data for series maintained by Bank of Japan ().

Page updated 2019-10-10
Handle: RePEc:boj:bojwps:wp18e03