The Fiscal Stance in Japan: A Model-based Analysis

Author/Editor:

Jean-Marc Fournier ; Takuma Hisanaga ; Anh D. M. Nguyen

Publication Date:

August 19, 2022

Electronic Access:

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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.

Series:

Working Paper No. 2022/164

Subject:

Frequency:

regular

English

Publication Date:

August 19, 2022

ISBN/ISSN:

9798400217135/1018-5941

Stock No:

WPIEA2022164

Pages:

22

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