Financial Crisis and Long-term Stagnation in Japan: Fiscal Consolidation under Deflationary Pressures

Mitsuhiro Fukao

No 2010-010, Keio/Kyoto Joint Global COE Discussion Paper Series from Keio/Kyoto Joint Global COE Program

Abstract: The Japanese economy faces a number of difficult economic problems to solve; declining working-age population, long-term deflation, monetary policy with zero-interest rate floor, and a large budget deficit. In this paper, we propose a few macro-economic measures to raise taxes without hurting the economic recovery. Specifically, gradual increases in indirect taxes with reductions in payroll tax and corporate income tax will be most effective in improving the Japanese fiscal situations.

Pages: 16 pages
Date: 2010
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Citations: View citations in EconPapers (4)

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