IMF Working Papers

The Fiscal Stance in Japan: A Model-based Analysis

By Jean-Marc Fournier, Takuma Hisanaga, Anh D. M. Nguyen

August 19, 2022

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Jean-Marc Fournier, Takuma Hisanaga, and Anh D. M. Nguyen The Fiscal Stance in Japan: A Model-based Analysis, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Subject: Fiscal consolidation, Fiscal policy, Fiscal stance, Output gap, Production, Public debt

Keywords: B. sensitivity analysis, Baseline calibration, Baseline model advice, Cycle stabilization, Debt buffer, Debt level, Fiscal consolidation, Fiscal policy path, Fiscal stance, Global, Government debt, Government deficit, Interest rate-growth differential, Japan's fiscal policy, Near-term fiscal policy, Output gap, Sustainability concern, Utility function

Publication Details

  • Pages:

    22

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2022/164

  • Stock No:

    WPIEA2022164

  • ISBN:

    9798400217135

  • ISSN:

    1018-5941

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