Achieving Fiscal Balance in Japan

Sagiri Kitao, Selahattin Imrohoroglu and Tomoaki Yamada

No 441, Economics Working Paper Archive at Hunter College from Hunter College Department of Economics

Abstract: Japan’s population is aging fast and the ratio of Japanese Government Bonds (JGBs) to GDP is highest among advanced economies. In addition, further government spending is expected, causing concerns about the potential for JGBs to become a significant global issue. In this paper we build a micro-data based, large-scale overlapping generations model for Japan in which individuals differ in age, gender, employment type, income, and asset holdings, and incorporate the Japanese pension rules in detail. We estimate age-consumption and age-earnings profiles from micro data, assume complete markets and use these to generate tax revenues and transfer payments for government accounts. We calibrate the model so that it replicates the main macroeconomic and fiscal indicators for 2010. Using existing pension law and fiscal parameters and the medium variants of fertility and survival probability projections, we produce future time paths for JGBs and the pension fund.

Keywords: Fiscal balance; Social security; Demographic trends (search for similar items in EconPapers)
JEL-codes: H55 H60 J11 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-age, nep-dem and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: ACHIEVING FISCAL BALANCE IN JAPAN* (2016)
Working Paper: Achieving Fiscal Balance in Japan (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:htr:hcecon:441

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