Population Aging in Japan: Demographic Shock and Fiscal Sustainability

Martin Mühleisen () and Hamid Faruqee

No 2001/040, IMF Working Papers from International Monetary Fund

Abstract: The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare. The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare. The paper develops a general equilibrium framework to examine the economic implications of population aging in Japan. Particular attention is paid to aggregate saving behavior which is modeled on the basis of empirical age-earnings profiles using a life-cycle approach. The paper's objectives are to (i) estimate the output loss caused by demographic changes and assess the impact of aging on Japan's government finances; and (ii) compare fiscal policy options with respect to their effects on output growth and economic welfare.

Keywords: WP; earnings; fiscal policy; age-earnings profile; Japan; aging; saving; general equilibrium analysis; debt situation; Japan block; pension liability; cyclical position; earnings difference; life-cycle earnings profile; A. Age-earnings profile; Demographic change; Securities; Wages; Global (search for similar items in EconPapers)
Pages: 29
Date: 2001-03-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Journal Article: Population aging in Japan: demographic shock and fiscal sustainability (2003)
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