Public Debt and Economic Growth in an Aging Japan

Toshihiro Ihori, Ryuta Kato, Masumi Kawade () and Shun-ichiro Bessho
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Toshihiro Ihori: University of Tokyo, http://www.u-tokyo.ac.jp/

No EMS_2006_11, Working Papers from Research Institute, International University of Japan

Abstract: This paper examines the effects of the demographic change and the government debt policy in Japan on economic growth and economic welfare, particularly by taking into account the existing public pension scheme as well as national medical expenditure through the existing public health insurance, where a computable overlapping generations model is used within a general equilibrium context. One of the main results of this paper is that the tax burden (GDP) ratio will increase up to about 36%, and the social security burden (GDP) ratio will increase up to 23.3% in 2050, even though the government tries to have a positive primary balance by 2010. The ratio of public health insurance benefits to GDP is expected to increase at 1% every 10 years, and the ratio will be around 9.6% in 2050. The 2004 public pension reform will successfully result in a 13 point decrease in the contribution rate from 36.44% to 23.53%, and reduce the social security burden (GDP) ratio by about 8 points from 23.27% to 15.02% in 2050, compared with the benchmark case.

Keywords: Words: Government Deficits; An aging Population; Public Pension Scheme; Public Health Insurance; Intergenerational Redistribution; Overlapping Generations Model; Simulation (search for similar items in EconPapers)
JEL-codes: E27 H55 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2006-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2006_11.pdf First version, 2006 (application/pdf)

Related works:
Working Paper: Public Debt and Economic Growth in an Aging Japan (2005)
Working Paper: Public Debt and Economic Growth in an Aging Japan (2005)
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