Fiscal Equalization in Japan: Assessment and Recommendations

Robin Boadway, Paul A. R. Hobson and Nobuki Mochida
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Paul A. R. Hobson: Department of Economics, Acadia University
Nobuki Mochida: Faculty of Economics, Universtiy of Tokyo

No CIRJE-F-94, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Intergovernmental fiscal relations in Japan have been strained in recent years. This paper seeks to assess the Japanese equalization transfer in the light of the theory of fiscal federalism. This paper argues that the case for equalization lies in offsetting net fiscal benefit (NFB) differentials across jurisdictions. It has been shown that the case for equalization and its design depend on the type of public good being provided as well as the mode of finance. Moreover, where equalization is called for, its form and level can be very different depending on whether the relevant policy goal is that of fiscal equity or fiscal efficiency. Studying the institutional context, we arrive at the conclusion that the system of equalization transfers in Japan is consistent with the application of those principles.

Pages: 49 pages
Date: 2000-10
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2000cf94

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