In the 1990s we have experienced a rapid increase in fiscal deficits. In the 1990s public spending and transfer payments have been gradually raised due to political pressure from interest groups, resulting in large budget deficits. The question of whether Japan’s fiscal policy is sustainable, in the sense of being consistent with an intertemporal budget constraint, has long been a concern.
KeywordsFiscal Policy Discount Factor Real Interest Rate Government Bond Transfer Payment
Unable to display preview. Download preview PDF.
- Azariadis, C., 1993, Intertemporal Macroeconomics,Blackwell.Google Scholar
- Blanchard, O., J.-C. Chouraqui, R.P. Hagemann and N. Sartor, 1990, The sustainability of fiscal policy: New answers and to an old question, OECD Economic Studies 15, 7–36.Google Scholar
- Diamond, P. A., 1965, National debt in a neoclassical growth model,American Economic Review 55, 1126–1150.Google Scholar
- Fukuda, S. and H. Teruyama, 1994, The sustainability of budget deficits in Japan, Hitotsubashi Journal of Economics 35, 109–119.Google Scholar
- Hamilton, J.D. and M.A. Flavin, 1986, On the limitations of government borrowing: A framework for empirical testing, American Economic Review 76, 808–816.Google Scholar
- Hang, A.A., 1991, Cointegration and government borrowing constraints: Evidence for the United States, Journal of Business and Economic Statist ics 9, 97–101.Google Scholar
- Uctum, M. and M. Wickens, 1997, Debt and deficit ceilings, and sustainability of fiscal policies: An international analysis, Centre for Economic Policy Research Discussion Paper # 1612.Google Scholar