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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Restoring Japan's Fiscal Sustainability
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- Randall S. Jones1, Satoshi Urasawa1
- Author Affiliations
- 1: OECD, France
- 23 mai 2013
- Bibliographic information
With gross government debt surpassing 200% of GDP, Japan’s fiscal situation is in uncharted territory. In addition to robust nominal GDP growth, correcting two decades of budget deficits requires a large and sustained fiscal consolidation based on a detailed and credible multi-year plan that includes measures to control spending and raise revenue. On the spending side, reforms to contain ageing-related outlays are the priority, while the consumption tax should be the main source of additional revenue, given that its impact on economic activity is less negative than other taxes. The plan should target a primary budget surplus large enough to stabilise the public debt ratio by 2020. The fiscal policy framework should be improved to help reinforce confidence in Japan's fiscal position and prevent a run-up in interest rates. Higher consumption taxes should be accompanied by well-targeted social spending, including the introduction of an earned income tax credit, to prevent a rise in inequality and poverty. This Working Paper relates to the 2013 OECD Economic Survey of Japan (www.oecd.org/eco/surveys/japan)
- Abenomics, independent fiscal councils, public debt, social security, Japanese economy, fiscal consolidation, fiscal management strategy, pensions, fiscal sustainability, debt dynamics, fiscal policy, consumption tax, poverty, inequality, reconstruction spending
- Classification JEL:
- H2: Public Economics / Taxation, Subsidies, and Revenue
- H5: Public Economics / National Government Expenditures and Related Policies
- H6: Public Economics / National Budget, Deficit, and Debt