The Fiscal Stance in Japan: A Model-based Analysis

Volume/Issue: Volume 2022 Issue 164

Publication date: August 2022

ISBN: 9798400217135

$20.00

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Economics- Macroeconomics , Public Finance , Economics / General , Fiscal stance , cycle stabilization , government deficit , government debt , baseline model advice , near-term fiscal policy , fiscal policy path , baseline calibration , Japan's fiscal policy , B , sensitivity analysis , Output gap , Fiscal consolidation , Global , utility function , sustainability concern , interest rate-growth differential , debt level , debt buffer

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Summary

This paper assesses Japan’s fiscal stance in the past and the future with a stochastic structural model called the Buffer-Stock Model of the Government. Our retrospective analysis suggests that the fiscal stance in the 1990s and the early 2000s was overall looser than the model recommendations. As for the future, the model advises the near-term fiscal policy to be supportive with a view to narrowing the output gap and minimizing hysteresis, while recommending a fiscal consolidation over the medium-term at a gradual pace.