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Fiscal Policy and Management in East Asia$
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Takatoshi Ito and Andrew K. Rose

Print publication date: 2007

Print ISBN-13: 9780226386812

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226387062.001.0001

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Sustainability, Debt Management, and Public Debt Policy in Japan

Sustainability, Debt Management, and Public Debt Policy in Japan

(p.377) 11 Sustainability, Debt Management, and Public Debt Policy in Japan
Fiscal Policy and Management in East Asia

Takero Doi

Toshihiro Ihori

Kiyoshi Mitsui

University of Chicago Press

The Japanese government has issued a very huge amount of government debts, making it crucial for the government to implement tight public debt policy. Japan's fiscal situation has deteriorated rapidly with the collapse of the bubble economy in the early 1990s and the deep and prolonged period of economic recession that ensued. Since national income did not grow much, tax revenue did not increase either. On the contrary, government spending has been gradually raised due to political pressures of interest groups, resulting in large budget deficits. This chapter examines sustainability issues of Japan's fiscal policy and discusses the country's debt management policy using theoretical models and numerical studies. It also investigates the desirable coordination of fiscal and monetary authorities toward fiscal reconstruction, first reviewing previous studies on sustainability issues and then evaluating Japan's debt management policy. The chapter concludes by investigating confidence crisis of government debt and spontaneous default of fiscal authority.

Keywords:   Japan, sustainability, public debt, fiscal policy, debt management, government debt, fiscal authority, economic recession, government spending, fiscal reconstruction

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