Can Increased Public Expenditure Efficiency Contribute to the Consolidation of Public Finances in Japan?

Brieuc Monfort

Working Papers from HAL

Abstract: The main narrative about the Japanese fiscal situation is about the unsustainable debt trajectory. On the public expenditure side however, Japan is relatively more efficient that its peers: using a Data Envelopment Analysis (DEA) methodology over a range of public policies, this paper finds that Japan has high efficiency score in health care, intermediate scores in education and non-pension social expenditures, but lower scores for administrative or infrastructure expenditures. Overall the input efficiency score of Japan is of 0.78 percent against 0.71 for the OECD on average and 0.64 percent for advanced G20 countries. We conservatively estimate that the scope for efficiency savings is of the order of 2.5 percentage points of GDP or 8 percent of non-pension public expenditures. Adding additional sectors were Japan overspends relative to its peer (such as agriculture or waste management), the overall saving could be of around 3.4 points of GDP, a significant contribution to the consolidation of public finance. There are however two caveats to the main results: Japan has comparatively less scope to consolidate its public finance through enhancing efficiency that its peers in the OECD, where efficiency savings are of the order of 4.1 points of GDP, or advanced G20 economies with savings of 4.7 points of GDP; aging pressures will contribute to further increase social expenditures, no matter how efficient they might be.

Keywords: Public finance; Public expenditure (search for similar items in EconPapers)
Date: 2015-05-15
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01548620
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://shs.hal.science/halshs-01548620/document (application/pdf)

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:hal:wpaper:halshs-01548620

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().