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ACHIEVING FISCAL BALANCE IN JAPAN*
Author(s) -
İmrohoroğlu Selahattin,
Kitao Sagiri,
Yamada Tomoaki
Publication year - 2016
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12150
Subject(s) - pension , economics , asset (computer security) , consumption (sociology) , overlapping generations model , debt , government (linguistics) , balance (ability) , revenue , government debt , fiscal policy , government revenue , tax revenue , consumption tax , monetary economics , labour economics , macroeconomics , tax reform , public economics , finance , indirect tax , social science , linguistics , philosophy , computer security , sociology , computer science , medicine , physical medicine and rehabilitation
Japan is aging and has the highest government debt‐to‐output ratio among advanced economies. In this article, we build a micro data‐based, large‐scale overlapping generations model for Japan in which individuals differ in age, gender, employment type, income, and asset holdings, and incorporate the Japanese pension rules. Using existing pension law, current fiscal policy, and medium variants of demographic projections, we produce future paths for government expenditures and tax revenues, with implications for government debt and the public pension fund. Additional pension reform, a higher consumption tax, and higher female labor force participation help achieve fiscal stability.