The Outlook for Financing Japan's Public Debt

January 1, 2010

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Format: Chicago

Kiichi Tokuoka. The Outlook for Financing Japan's Public Debt, (USA: International Monetary Fund, 2010) accessed October 4, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Despite the rapid rise in public debt and large fiscal deficits, Japanese Government Bond (JGB) yields have remained fairly stable. Possible factors include: Japan's sizeable pool of household savings, presence of large and stable institutional investors, and strong home bias. These factors are likely to persist for some time, but going forward, the market's capacity to absorb debt is likely to diminish, as population aging reduces savings inflows and financial reforms enhance risk appetite. This could in turn strengthen the link between JGB yields and the stock of public debt. In light of these structural changes in the market, fiscal consolidation will be key for maintaining market stability.

Subject: Bond yields, Financial institutions, Flow of funds, Government debt management, National accounts, Public debt, Public financial management (PFM), Sovereign bonds

Keywords: Bond yield, Bond yields, Deficit, FILP issue, FILP liability, Fiscal deficit, Fiscal deficits, Flow of funds, Global, Government debt management, Gross debt, Japanese government bonds, JGB market, JGB yield, Public debt, Sovereign bonds, WP, Yield, Yields

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/019
Stock No:

WPIEA2010019
ISBN:

9781451962260
ISSN:

1018-5941

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