The Domestic and Global Impact of Japan's Policies for Growth

Nicoletta Batini, Alessandro Rebucci () and Papa N'Diaye

No 2005/209, IMF Working Papers from International Monetary Fund

Abstract: Japan is facing a sizable fiscal imbalance against a backdrop of weak trend growth and growing external imbalances in the world economy. This paper examines the possible impact of fiscal adjustment and productivity-enhancing structural reforms on the Japanese and world economies. Simulation results indicate that these could reduce substantially Japan's fiscal imbalance with only limited spillovers to the rest of the world. Specifically, faster productivity growth would help lower Japan's debt and limit the tendency of fiscal consolidation to increase the external surplus. In fact, very rapid productivity growth could potentially lead to a decline in Japan's external surplus and thereby have a positive effect on global imbalance. The modest extent of the spillovers to the rest of the world reflect the small size of the shocks and the diminished size of Japan in the world economy.

Keywords: WP; Japan; goods; government debt-to-GDP ratio; productivity improvement; productivity-enhancing reform; Global External Imbalance; Fiscal Consolidation; Productivity Growth; Macroeconomic Models; trend productivity growth; productivity growth in Japan; GDP increase; GDP terms; Japan's current account surplus; productivity gain; interest rate premium; monetary policy; increase in productivity growth; Productivity; Current account; Consumption; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 22
Date: 2005-11-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Journal Article: The domestic and global impact of Japan’s policies for growth (2005)
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