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8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
1/19
MNHD R`rkdgb Qmpcr Zcrdcs
@ptdomi Ldsjmi Q`idjy Xuic l`r Mjfdcvdgb Ldsjmi Zustmdgmhdidty5
M Empmgcsc Jmsc Ztuny
Gm`yukd T`sfdg`, ^ctsur` Odz`bujfd,mgn Lmrfmn ̂ mbfdzmncf-Fcsmry
G`. 3:=Eugc 81=3
Msdmg Ncvci`pocgt Hmgk Dgstdtutc
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
2/19
^fc R`rkdgb Qmpcr scrdcs ds m j`gtdgumtd`g `l tfc l`rocriy gmocn Ndsjussd`g Qmpcr scrdcs;tfc guohcrdgb `l tfc pmpcrs j`gtdgucn wdtf`ut dgtcrruptd`g `r jfmgbc. MNHD—s w`rkdgbpmpcrs rclicjt dgdtdmi dncms `g m t`pdj mgn mrc p`stcn `gidgc l`r ndsjussd`g. MNHD cgj`urmbcsrcmncrs t` p`st tfcdr j`oocgts `g tfc omdg pmbc l`r cmjf w`rkdgb pmpcr (bdvcg dg tfcjdtmtd`g hci`w). Z`oc w`rkdgb pmpcrs omy ncvci`p dgt` `tfcr l`ros `l puhidjmtd`g.
Zubbcstcn jdtmtd`g5
T`sfdg`, G., ^. Odz`bujfd, mgn L. ^mbfdzmncf-Fcsmry. 81=3. @ptdomi Ldsjmi Q`idjy Xuic l`r Mjfdcvdgb Ldsjmi Zustmdgmhdidty5 M Empmgcsc Jmsc Ztuny. MNHD R`rkdgb Qmpcr 3:=. ^`ky 5̀ Msdmg Ncvci`pocgt Hmgk Dgstdtutc. Mvmdimhic5 fttp5//www.mnh.`rb/puhidjmtd`gs/`ptdomi-ldsjmi-p`idjy-ruic-mjfdcvdgb-ldsjmi-sustmdgmhdidty-empmgcsc-jmsc-stuny/
Qicmsc j`gtmjt tfc mutf`rs l`r dgl`romtd`g mh`ut tfds pmpcr.
Comdi5 gy`sfdg`Amnhd.`rb, todz`Arcdtmku-u.mj.ep, lmrfmntfAbomdi.j`o
Gm`yukd T`sfdg` ds Ncmg mgn JC@ `l tfc Msdmg Ncvci`pocgt Hmgk Dgstdtutc.
^ctsur` Odz`bujfd ds Mss`jdmtc Qr`lcss`r `l Cj`g`odjs mt Xcdtmku Sgdvcrsdty, Jfdhm,Empmg.
Lmrfmn ^mbfdzmncf-Fcsmry ds Mssdstmgt Qr`lcss`r `l Cj`g`odjs mt Kcd` Sgdvcrsdty,^`ky`. Jurrcgtiy, fc ds mis` m rcscmrjf mssdstmgt t` tfc Ncmg `l tfc Msdmg Ncvci`pocgtHmgk Dgstdtutc mgn ds m vdsdtdgb sjf`imr mt tfc Jrcndt Xdsk Nmtmhmsc (JXN) Mss`jdmtd`g `lEmpmg.
^fc vdcws cxprcsscn dg tfds pmpcr mrc tfc vdcws `l tfc mutf`rs mgn n` g`t gcjcssmrdiyrclicjt tfc vdcws `r p`idjdcs `l MNHD, MNH, dts H`mrn `l Ndrcjt`rs, `r tfc b`vcrgocgtstfcy rcprcscgt. MNHD n`cs g`t bumrmgtcc tfc mjjurmjy `l tfc nmtm dgjiuncn dg tfds pmpcrmgn mjjcpts g` rcsp`gsdhdidty l`r mgy j`gscqucgjcs `l tfcdr usc. ^crodg`i`by uscn omyg`t gcjcssmrdiy hc j`gsdstcgt wdtf MNH `lldjdmi tcros.
R`rkdgb pmpcrs mrc suhecjt t` l`romi rcvdsd`g mgn j`rrcjtd`g hcl`rc tfcy mrc ldgmidzcnmgn j`gsdncrcn puhidsfcn.
Msdmg Ncvci`pocgt Hmgk DgstdtutcKmsuodbmsckd Hudindgb 6L
:-8-3 Kmsuodbmsckd, Jfdy`nm-ku^`ky` =11-
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
3/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
Mhstrmjt
Empmg—s ncht-t`-br`ss n`ocstdj pr`nujt (BNQ) rmtd` ds tfc fdbfcst mo`gb @rbmgdsmtd`g l`rCj`g`odj J`-`pcrmtd`g mgn Ncvci`pocgt (@CJN) j`ugtrdcs. ^fds pmpcr wdii ldrstiy mgswcr
tfc qucstd`g `l wfctfcr Empmgcsc b`vcrgocgt ncht ds sustmdgmhic. Gcxt, wfdic tfc N`omrj`gndtd`g mgn H`fg—s j`gndtd`g mrc `ltcg uscn dg tfc idtcrmturc t` jfcjk wfctfcr mb`vcrgocgt—s ncht sdtumtd`g ds dg m nmgbcr`us z`gc, tfds pmpcr wdii sf`w tfmt tfc N`omrj`gndtd`g ds `htmdgcn `giy lr`o tfc b`vcrgocgt hunbct j`gstrmdgt (gmociy tfc suppiy `lb`vcrgocgt h`gns) mgn n`cs g`t tmkc dgt` mjj`ugt tfc ncomgn l`r b`vcrgocgt h`gns. Msdopic j`opmrds`g `l tfc dgtcrcst rmtc mgn tfc br`wtf rmtc `l mg cj`g`oy usdgb tfc N`omrj`gndtd`g ds g`t mncqumtc t` jfcjk tfc stmhdidty `l m b`vcrgocgt—s hunbct ncldjdt. H`tf tfcdgtcrcst rmtc mgn tfc br`wtf rmtc `l tfc cj`g`oy mrc nctcrodgcn cgn`bcg`usiy dg tfc o`nci.^fdrniy, tfds pmpcr sf`ws tfmt H`fg—s j`gndtd`g smtdsldcs tfc stmhdidty `l tfc b`vcrgocgthunbct dg tfc i`gb rug hy dop`sdgb j`gstrmdgts `g tfc prdomry hmimgjc. F`wcvcr, H`fg—sj`gndtd`g n`cs g`t mjfdcvc cj`g`odj stmhdidty„cvcg dl tfc j`gndtd`g ds smtdsldcn, tfc rcj`vcry`l tfc cj`g`oy omy g`t hc mjfdcvcn. ^fds pmpcr wdii pr`p`sc m gcw j`gndtd`g tfmt smtdsldcs
h`tf tfc stmhdidty `l tfc b`vcrgocgt hunbct mgn tfc rcj`vcry `l tfc cj`g`oy. ^fc pmpcr wdiisfcn idbft `g tfcsc dssucs h`tf tfc`rctdjmiiy mgn copdrdjmiiy. ^fc copdrdjmi ldgndgbs ncjimrctfmt dg `rncr t` mjfdcvc ldsjmi sustmdgmhdidty hmscn `g tfc `ptdomi ldsjmi p`idjy ruic pr`vdncn dgtfds pmpcr, h`tf sdncs `l tfc Empmgcsc b`vcrgocgt hunbct (cxpcgndturc mgn rcvcguc) gccnt` hc mneustcn sdouitmgc`usiy. O`rc`vcr, tfc rcsuits sf`w tfmt tfc ncjrcmsc dg b`vcrgocgtcxpcgndturc fms t` hc t` o`rc tfmg tfc dgjrcmsc dg tmx rcvcguc.
ECI Jimssdldjmtd`g5 C>8, C
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
4/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
J`gtcgts
=. Dgtr`nujtd`g mgn mg @vcrvdcw `l tfc Empmgcsc H`gn Omrkct ..................................... :
8. Xcimtcn Idtcrmturc ...................................................................................................... 2
:. ^fc Xcvdscn N`omr J`gndtd`g mgn H`fg—s J`gndtd`g J`ohdgdgcn wdtf tfc H`gnOmrkct ....................................................................................................................... 6
>. Omtfcomtdjmi O`nci ................................................................................................... 4
>.= Xcvdscn N`omr J`gndtd`g J`ohdgcn wdtf tfc H`gn Omrkct ......................... =1
3. Ldsjmi Q`idjy Xuic mgn ^mx Xuic t` Mjfdcvc Zustmdgmhdidty `l tfc Hunbct ................. ==
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
5/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
=. DG^X@NSJ^D@G MGN MG @\CX\DCR @L ^FCEMQMGCZC H@GN OMXKC^
Empmg—s ncht-t`-br`ss n`ocstdj pr`nujt (BNQ) rmtd` ds tfc fdbfcst mo`gb @rbmgdsmtd`gl`r Cj`g`odj J`-`pcrmtd`g mgn Ncvci`pocgt (@CJN) j`ugtrdcs, mt o`rc tfmg 881%(Ldburc =). ^fc dgtcrcstdgb p`dgt ds tfmt Empmg—s ncht ds stdii sustmdgmhic, wfdic tfcs`utfcrg Cur`pcmg j`ugtrdcs Brccjc mgn Jyprus wcgt hmgkrupt nuc t` fmvdgbb`vcrgocgt ncldjdts tfmt wcrc fdbf, mitf`ubf tfcdr ncht-t`-BNQ rmtd`s wcrc i`wcrj`opmrcn t` Empmg—s.
Ldburc = diiustrmtcs tfc bcgcrmi b`vcrgocgt br`ss ldgmgjdmi idmhdidtdcs ms m pcrjcgtmbc `lBNQ l`r scicjtcn @CJN j`ugtrdcs. Dt ds jicmr tfmt tfc rmtd` l`r Empmg ds tfc fdbfcst, mt884.. Mltcr Empmg, Brccjc mgn Dtmiy fmvc tfc scj`gn mgn tfdrn fdbfcst icvcismt =66.2% mgn =>2.8%, rcspcjtdvciy. ^fc mvcrmbc br`ss ncht-t`-BNQ rmtd` l`r mii@CJN j`ugtrdcs ds ===.=%. Cst`gdm fms tfc i`wcst rmtd` mo`gb @CJN j`ugtrdcs, mt
=:%.Ldburc =5 Br`ss Ncht/Br`ss N`ocstdj Qr`nujt dg Zcicjtcn @CJN J`ugtrdcs, 81=>
@CJN ? @rbmgdsmtd`g l`r Cj`g`odj J`-`pcrmtd`g mgn Ncvci`pocgt.
G`tc5 Bcgcrmi b`vcrgocgt br`ss ldgmgjdmi idmhdidtdcs ms m pcrjcgtmbc ̀ l BNQ.
Z`urjc5 @CJN Cj`g`odj @uti``k G`. 43 nmtmhmsc (81=>).
Mjjuouimtcn b`vcrgocgt ncht dg Empmg g`w mo`ugts t` o`rc tfmg 881% `l BNQ mgndt wdii hc ndlldjuit t` dssuc lurtfcr h`gns ugicss tfc Hmgk `l Empmg purjfmscs Empmgcscb`vcrgocgt h`gns (EBHs). Ncspdtc dts fubc hunbct ncldjdt, tfc Empmgcsc cj`g`oy jmgsustmdg tfc stmhdidty `l tfc h`gn omrkct. Omgy Cur`pcmgs msk wfy Empmg ds stdii stmhicwfdic Brccjc mgn `tfcr Cur`pcmg j`ugtrdcs mrc dg scrd`us tr`uhic.
^fc ndllcrcgjcs hctwccg Empmg mgn Brccjc jmg hc l`ugn dg tfc ncomgn l`rb`vcrgocgt ncht, rmtfcr tfmg tfc suppiy `l b`vcrgocgt ncht. O`rc tfmg 41% `l tfcB`vcrgocgt `l Empmg—s ncht ds fcin hy n`ocstdj dgvcst`rs dg hmgks, p`stmi smvdgbs, idlcdgsurmgjc, mgn pcgsd`g lugns. ^fc Empmgcsc b`vcrgocgt dssucs vmrd`us kdgns `l
h`gns hmscn `g ncomgn hy ndllcrdgb scjt`rs, mgn tfc b`vcrgocgt h`gn omrkct fms
884.<
=66.2
=>2.8
===.=
:3.8 :=.<
=:.1
1.1
31.1
=11.1
=31.1
811.1
831.1
%
:
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
6/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
hccg qudtc stmhic dg Empmg. Empmgcsc dgvcst`rs j`gtdguc t` f`in b`vcrgocgt h`gns,sdgjc Hmsci jmpdtmi rcqudrcocgts sct tfc rdsk `l b`vcrgocgt h`gns mt zcr`. @g tfc `tfcrfmgn, o`rc tfmg 21% `l dgvcst`rs dg Brccjc—s h`gn omrkct mrc l`rcdbg mgn tfcy fmvchccg qudjk t` o`vc `ut `l tfc omrkct mt tdocs `l rdsk.
Ldburc 8 ncpdjts tfc suppiy `l b`vcrgocgt h`gns mgn tfc ncomgn l`r b`vcrgocgt nchtdg Empmg mgn Brccjc. ^fc vcrtdjmi idgc sf`ws tfc suppiy `l b`vcrgocgt h`gns dg tfcprdomry omrkct, sdgjc g` omttcr wfmt tfc rmtc `l dgtcrcst, tfc b`vcrgocgt fms t`ldgmgjc dts hunbct ncldjdts. ^fc ncomgn l`r b`vcrgocgt h`gns dgjrcmscs wfcg tfcdgtcrcst rmtc rdscs. ^fus tfc ncomgn jurvc l`r b`vcrgocgt h`gns ds upwmrn si`pdgb dgtfc ldburc.
Ldburc 85 B`vcrgocgt H`gn Omrkcts `l Empmg mgn Brccjc
Z`urjc5 T`sfdg` mgn ^mbfdzmncf-Fcsmry (81=>m).
H`tf Empmg mgn Brccjc fmvc dgjrcmscn tfcdr smics `l b`vcrgocgt h`gns, ocmgdgb tfmttfc suppiy jurvc `l b`vcrgocgt h`gns fms sfdltcn t` tfc rdbft dg tfc prdomry omrkct.^fc ncomgn l`r Empmgcsc b`vcrgocgt h`gns hy hmgks, dgsurmgjc j`opmgdcs, mgnpcgsd`g lugns fms hccg dgjrcmsdgb ms tfc siubbdsf cj`g`oy fms rcnujcn ncomgn l`rj`rp`rmtc i`mgs (Ldburc 8). O`gctmry cmsdgb fms dgjrcmscn hmgk ncp`sdts mgn tfcsclugns fmvc `ltcg hccg dgvcstcn dg b`vcrgocgt h`gns. Empmgcsc dgtcrcst rmtcs,tfcrcl`rc, rcomdg i`w.
^fc hcfmvd`r `l f`incrs `l Empmgcsc mgn Brcck ncht ds ndstdgjtdvc (^mhic =). @vcrscmsdgvcst`rs, wf` f`in 21% `l b`vcrgocgt h`gns dg Brccjc, mrc qudjk t` scii tfco dl tfcylcci tfmt rdsk ds dgjrcmsdgb. Ms ncomgn l`r Brcck h`gns fms ndodgdsfcn, tfc ncomgnjurvc `l tfc h`gns fms sfdltcn t` tfc iclt (scc Ldburc 8, rdbft-fmgn brmpf), wfdjf fmspr`brcssdvciy rmdscn tfc dgtcrcst rmtc `g Brcck h`gns. ^fc Brcck dgtcrcst rmtcdgjrcmscn t` o`rc tfmg 81%, wfdic tfc Empmgcsc dgtcrcst rmtc fms rcomdgcn mt mh`ut=% `r icss (ms sf`wg dg tfc n`wgwmrn si`ppdgb nmsfcn idgc `l Ldburc :). Zdgjc `giy3% `l tfc t`tmi h`gns dssucn hy tfc Empmgcsc b`vcrgocgt mrc fcin hy `vcrscmsdgvcst`rs, tfcrc ds oujf icss idkcidf``n `l jmpdtmi lidbft, sdgjc n`ocstdj f`incrs tcgn t`rctmdg tfcdr dgvcstocgts (T`sfdg` mgn Odz`bujfd 81=:h).
>
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
7/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
^mhic =5 F`incrs `l Empmgcsc mgn Brcck B`vcrgocgt H`gns, 81==
F`incrs `lEmpmgcsc B`vcrgocgt H`gns
% `l ^`tmi F`incrs `lBrcck B`vcrgocgt H`gns
% `l ^`tmi
Hmgk mgn p`stmi smvdgbs >3 @vcrscms dgvcst`rs ::Idlc mgn g`g-idlc dgsurmgjc 81 N`ocstdj dgvcst`rs 8=
Quhidj pcgsd`g lugns =1 Cur`pcmg Jcgtrmi Hmgk =6
Qrdvmtc pcgsd`g lugns > Hdimtcrmi i`mgs =>
Hmgk `l Empmg 6 Z`jdmi pcgsd`g lugns <
@vcrscms dgvcst`rs 3 Dgtcrgmtd`gmi O`gctmry Lugn 3
F`uscf`ins 3 Brcck n`ocstdj lugns :
@tfcrs :
G`tc5 Dg Brccjc, 21% `l ncht ds fcin hy `vcrscms dgvcst`rs, j`opmrcn wdtf 3% l`r Empmg.
Z`urjc5 T`sfdg` mgn ^mbfdzmncf-Fcsmry (81=>h).
Ldburc :5 Dgtcrcst Xmtc mgn B`vcrgocgt H`gns @utstmgndgb
G`tc5 ^fc rdbft-fmgn sjmic sf`ws `utstmgndgb b`vcrgocgt h`gns mgn `tfcr b`vcrgocgt h`rr`wdgbs. ^fc
mggumi nmtm wms j`gvcrtcn t` mggumi nmtm mgn cxp`gcgtdmiiy so``tfcn. ^fc dgtcrcst rmtc ds tfc =1 ycmr-ydcin`l tfc Empmgcsc b`vcrgocgt h`gns.
Z`urjc5 GDKKCD GCCNZ nmtmhmsc.
Empmg fms mjfdcvcn tfc fdbfcst idlc cxpcjtmgjy dg tfc w`rin mgn tfc Empmgcsccj`g`oy ds lmjdgb mg mbdgb p`puimtd`g. Hcjmusc `l tfc mbdgb p`puimtd`g, s`jdmi wcilmrcj`sts fmvc stmrtcn t` dgjrcmsc mgn jurrcgtiy `gc-tfdrn `l b`vcrgocgt spcgndgb dsmii`jmtcn t` s`jdmi wcilmrc, wfdic tfc b`vcrgocgt hunbct ncldjdt ds rdsdgb cvcry ycmr. Dgtfc bcgcrmi mjj`ugt hunbct l`r 81=3, s`jdmi scjurdty mjj`ugts l`r :8.2% `l tfc t`tmihunbct. ^fds ds tfc ome`r rcms`g l`r tfc dgjrcmsc dg tfc mo`ugt `l `utstmgndgbb`vcrgocgt h`gns ms sf`wg dg Ldburc :. ^fc scj`gn rcms`g l`r tfds j`gtdgu`us hunbctncldjdcgt ds tfc fdbf pmyocgts lr`o tfc jcgtrmi b`vcrgocgt t` i`jmi b`vcrgocgts. Mr`ugn =
>.3
3
= 4 4 > ] =
= 4 4 > ] >
= 4 4 3 ] :
= 4 4 < ] 8
= 4 4 2 ] =
= 4 4 2 ] >
= 4 4 6 ] :
= 4 4 4 ] 8
8 1 1 1 ] =
8 1 1 1 ] >
8 1 1 = ] :
8 1 1 8 ] 8
8 1 1 : ] =
8 1 1 : ] >
8 1 1 > ] :
8 1 1 3 ] 8
8 1 1 < ] =
8 1 1 < ] >
8 1 1 2 ] :
8 1 1 6 ] 8
8 1 1 4 ] =
8 1 1 4 ] >
8 1 = 1 ] :
8 1 = = ] 8
8 1 = 8 ] =
8 1 = 8 ] >
8 1 = : ] :
1
8
>
<
6
=1
=8
% p
c r m g g u o
O d i i d ` g s
@utstmgndgb B`vcrgcocgt H`gn (XFZ) Dgtcrcst rmtc (IFZ)
3
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
8/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
s`jdmi scjurdty. Omgy i`jmi b`vcrgocgts rciy `g jcgtrmi b`vcrgocgt trmgslcrs wdtf`utomkdgb cll`rts tfcoscivcs t` rcvdtmidzc tfcdr rcbd`gmi cj`g`odcs (T`sfdg` mgn^mbfdzmncf-Fcsmry, l`rtfj`odgb 81= sf`ws tfc b`vcrgocgt h`gn dgtcrcst rmtcs `l scicjtcn @CJN j`ugtrdcs. ^fc
Brcck b`vcrgocgt h`gn dgtcrcst rmtc dgjrcmscn sunncgiy wfcg tfc j`ugtry—s hunbctncldjdt wms dg m scrd`us j`gndtd`g mgn j`uin g`t hc rcnccocn hy tmx pmycrs— o`gcy.L`rcdbg dgvcst`rs mskcn l`r m rdsk prcoduo l`r Brcck b`vcrgocgt h`gns mgn l`rcdbgdgvcst`rs stmrtcn t` scii Brcck h`gns, wfdjf dgjrcmscn tfc dgtcrcst rmtc cvcg lurtfcr. Dgj`gtrmst, tfc h`tt`o idgc dg tfc ldburc sf`ws tfc Empmgcsc b`vcrgocgt h`gn dgtcrcstrmtc, wfdjf ds tfc i`wcst mo`gb tfc scicjtcn @CJN j`ugtrdcs l`r tfc rcms`gs cxpimdgcndg Ldburc 8.
Empmg—s ncomgn l`r b`vcrgocgt h`gns ds dgjrcmsdgb mgn tfc ncomgn jurvc l`rb`vcrgocgt h`gns ds sfdltdgb t` tfc rdbft, sdgjc hmgks, dgsurmgjc j`opmgdcs, mgnpcgsd`g lugns, ctj. mrc i``kdgb t` cgj`urmbc dgvcstocgt. Hmgks fmvc j`gtdgucn t`rcjcdvc ncp`sdts mgn mrc i``kdgb l`r dgvcstocgt dg b`vcrgocgt h`gns. Dgsurmgjc mgn
puhidj pcgsd`g lugns dg Empmg mrc dgjidgcn t` dgvcst dg b`vcrgocgt h`gns, ms tfcy mrcrcbmrncn ms smlc msscts. ^fcrcl`rc, tfc ncomgn l`r b`vcrgocgt h`gns fms hccgdgjrcmsdgb, s` tfc ncomgn jurvc l`r b`vcrgocgt h`gns fms hccg dgjrcmsdgb mgn fmskcpt tfc Empmgcsc dgtcrcst rmtc i`w.
Ldburc >5 Dgtcrcst Xmtcs dg Zcicjtcn @CJN j`ugtrdcs
@CJN ? @rbmgdsmtd`g l`r Cj`g`odj J`-`pcrmtd`g mgn Ncvci`pocgt.G`tc5 ^fc rmtc ds tfc =1-ycmr b`vcrgocgt h`gn dgtcrcst rmtc. Bcgcrmiiy, tfc ydcin ds jmijuimtcn mt tfc prc-tmxicvci hcl`rc ncnujtd`gs l`r hr`kcrmbc j`sts mgn j`oodssd`gs, mgn ds ncrdvcn lr`o tfc rcimtd`gsfdp hctwccgtfc prcscgt omrkct vmiuc `l tfc h`gn mgn tfc vmiuc mt omturdty, tmkdgb dgt` mjj`ugt dgtcrcst pmyocgts pmdntfr`ubf t` omturdty.
O`gtfiy ldburcs sf`wg mrc jmijuimtcn ms tfc mvcrmbc ̀ l wcdbftcn ̀ r ug-wcdbftcn mrdtfoctdj rmtcs rcimtdgb t` miinmys `r spcjdldcn nmys dg tfc o`gtf `r t` m nmy mt `r gcmr tfc o`gtf—s cgn. L`r sf`rt- mgn i`gb-tcro dgtcrcstrmtcs, mggumi mgn qumrtcriy nmtm mrc tfc mvcrmbcs `l tfc o`gtfiy ldburcs, wfdic l`r ’`vcrgdbft‟ rmtcs, mggumimgn qumrtcriy nmtm usumiiy rclcr t` tfc ldburc l`r tfc ldgmi o`gtf `l tfc pcrd`n.
Z`urjc5 O`gtfiy O`gctmry mgn Ldgmgjdmi Ztmtdstdjs (OCD), @CJN stmtdstdjs, rcicmscn 3 Omy 81=3.
Xcbmrndgb tfc b`vcrgocgt h`gn omrkcts, tfc N`omr j`gndtd`g mgn H`fg—s j`gndtd`gmrc `ltcg uscn dg tfc idtcrmturc t` jfcjk wfctfcr tfc cj`g`oy ds dg m nmgbcr`us z`gc `rg`t. N`omr subbcsts tfmt mg cj`g`oy sf`uin omkc dts dgtcrcst rmtc i`wcr tfmg tfc
1
3
=1
=3
81
83
:1
:3
E m g - 8 1 1 1
E u i - 8 1 1 1
E m g - 8 1 1 =
E u i - 8 1 1 =
E m g - 8 1 1 8
E u i - 8 1 1 8
E m g - 8 1 1 :
E u i - 8 1 1 :
E m g - 8 1 1 >
E u i - 8 1 1 >
E m g - 8 1 1 3
E u i - 8 1 1 3
E m g - 8 1 1 <
E u i - 8 1 1 <
E m g - 8 1 1 2
E u i - 8 1 1 2
E m g - 8 1 1 6
E u i - 8 1 1 6
E m g - 8 1 1 4
E u i - 8 1 1 4
E m g - 8 1 = 1
E u i - 8 1 = 1
E m g - 8 1 = =
E u i - 8 1 = =
E m g - 8 1 = 8
E u i - 8 1 = 8
E m g - 8 1 = :
E u i - 8 1 = :
E m g - 8 1 = >
E u i - 8 1 = >
% p
c r m g g
u o
Lrmgjc
Bcromgy
Brccjc
Dtmiy
Empmg
Q`rtubmi
Zpmdg
SgdtcnKdgbn`o
Sgdtcn Ztmtcs
Brccjc
Empmg
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
9/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
br`wtf rmtc `l tfc cj`g`oy. H`fg pr`p`scs tfmt m prdomry hmimgjc fms t` hcomdgtmdgcn s` tfmt tfc ncht-t`-BNQ rmtd` n`cs g`t ndvcrbc lr`o dts `rdbdgmi icvci.
^fc purp`sc `l tfds pmpcr ds tw`l`in. ^fc ldrst p`dgt wc wdii mrbuc ds tfmt tfc N`omrj`gndtd`g ds `htmdgcn `giy lr`o tfc b`vcrgocgt hunbct j`gstrmdgt (gmociy tfc suppiy `l
b`vcrgocgt h`gns) mgn n`cs g`t tmkc dgt` mjj`ugt tfc ncomgn l`r b`vcrgocgt h`gns. M sdopic j`opmrds`g `l tfc dgtcrcst rmtc mgn tfc br`wtf rmtc `l tfc cj`g`oy ds g`tmncqumtc t` jfcjk tfc stmhdidty `l tfc b`vcrgocgt hunbct ncldjdt ms h`tf tfc dgtcrcstrmtc mgn tfc br`wtf rmtc `l tfc cj`g`oy mrc nctcrodgcn cgn`bcg`usiy dg tfc o`nci.
^fc scj`gn p`dgt ds tfmt H`fg—s j`gndtd`g smtdsldcs tfc stmhdidty `l tfc b`vcrgocgthunbct dg tfc i`gb rug hy dop`sdgb j`gstrmdgts l`r tfc prdomry hmimgjc. F`wcvcr, dtn`cs g`t mjfdcvc cj`g`odj stmhdidty. Cvcg dl H`fg—s j`gndtd`g ds smtdsldcn, tfc rcj`vcry`l tfc cj`g`oy omy g`t hc mjfdcvcn. ^fds pmpcr wdii pr`p`sc m gcw j`gndtd`g tfmt jmgsmtdsly h`tf tfc stmhdidty `l tfc b`vcrgocgt hunbct mgn tfc rcj`vcry `l tfc cj`g`oy.
^fc pmpcr ds `rbmgdzcn ms l`ii`ws. Zcjtd`g 8 pr`vdncs tfc rcimtcn idtcrmturc. Zcjtd`g :sf`ws ldrstiy m rcvdsd`g `l tfc N`omr j`gndtd`g hy dgjiundgb h`tf tfc suppiy mgn
ncomgn l`r b`vcrgocgt h`gns dg tfc o`nci. Zcj`gniy, dt sf`ws tfmt H`fg—s j`gndtd`gmnnrcsscs `giy tfc stmhdidty `l tfc b`vcrgocgt hunbct j`gstrmdgt mgn tfmt tfc rcj`vcry`l tfc cj`g`oy odbft g`t mjfdcvcn hy sdopiy mppiydgb H`fg—s ruic. ^fc gcw j`gndtd`gsl`r tfc stmhdidty `l tfc b`vcrgocgt hunbct ncldjdt mgn tfc rcj`vcry `l tfc cj`g`oy mrcpr`vdncn dg tfds scjtd`g. Zcjtd`g > pr`vdncs tfc omtfcomtdjmi o`nci l`r tfc gcw ldsjmip`idjy ruic, wfdjf smtdsldcs h`tf tfc stmhdidty `l tfc b`vcrgocgt hunbct mgn tfc rcj`vcry`l tfc cj`g`oy. Zcjtd`g 3 pr`vdncs tfc copdrdjmi survcy `l tfc pr`p`scn ldsjmi p`idjyruic l`r Empmg. Zcjtd`g < j`gtmdgs tfc j`gjiundgb rcomrks.
8. XCIM^CN ID^CXM^SXC
^fcrc ds suhstmgtdmi rcscmrjf j`gjcrgdgb tfc ldsjmi sustmdgmhdidty j`gndtd`gs `l tfcb`vcrgocgt hunbct j`gstrmdgt. ^fc sustmdgmhdidty `l puhidj ncht jmg hc cxmodgcn lr`otfc b`vcrgocgt hunbct j`gstrmdgt dg tfc ldsjmi p`idjy idtcrmturc. H`fg (=446) pr`p`scn mndllcrcgt ldsjmi sustmdgmhdidty tcst t` cstdomtc tfc trmgsvcrsmiiy j`gndtd`g. Fc l`ugn tfmtmg dgjrcmsc dg tfc rmtd` `l b`vcrgocgt ncldjdt t` BNQ dgjrcmscn tfc rmtd` `l tfc prdomrysurpius t` BNQ lr`o =4=< t` =443 dg tfc Sgdtcn Ztmtcs (SZ). Fc j`gjiuncn tfmt SZldsjmi p`idjy sustmdgcn mg dgtcrtcop`rmi hunbct j`gstrmdgt. H`fg (8113) mis` cxmodgcntfc sustmdgmhdidty `l SZ ldsjmi p`idjy hy usdgb nmtm lr`o tfc SZ ldsjmi rcj`rns lr`o=248‚‚811: mgn jrdtdjmiiy rcvdcwcn tfc sustmdgmhdidty j`gndtd`gs mgn tfcdr tcstmhicdopidjmtd`gs, mppiydgb tfco t` SZ nmtm t` copfmsdzc tfc rmodldjmtd`gs `l cj`g`odjbr`wtf. M ’br`wtf ndvdncgn‟ fms fdst`rdjmiiy j`vcrcn tfc cgtdrc dgtcrcst hdii `g SZ ncht.Sgdt r``t tcsts `g rcmi scrdcs, ugsjmicn hy BNQ, mrc ndst`rtcn hy tfc scrdcs— scvcrcfctcr`skcnmstdjdty. ^fc o`st jrcndhic cvdncgjc dg lmv`r `l sustmdgmhdidty ds tfc r`hustp`sdtdvc rcsp`gsc `l prdomry surpiuscs t` liujtumtd`gs dg tfc ncht-t`-BNQ rmtd`.
L`r Empmgcsc jmscs, tfcrc mrc mis` suhstmgtdmi copdrdjmi stundcs `g tfds dssuc. M stunyhy T`sfdg` mgn Odz`bujfd (81=1) dgvcstdbmtcs tfc r`ic `l tfc Idhcrmi Nco`jrmtdj Qmrty`g tfc ldcin `l puhidj cxpcgndturc. ^fc stuny sf`ws tfmt spcgndgb dgdtdmiiy lucicnEmpmg—s rmpdn p`stwmr br`wtf mgn kcpt tfc INQ dg p`wcr l`r o`st `l tfc imst fmil-jcgtury. F`wcvcr, mltcr tfc cj`g`odj huhhic hurst dg =441, tfc j`ugtry lcii dgt` m i`gbcj`g`odj omimdsc, jmiicn tfc ’i`st ncjmnc.‟ J`gsdncrdgb tfc jurrcgt EBHjdrjuostmgjcs dg Empmg, wc dgtr`nujc tfc stmhdidty j`gndtd`g l`r tfc b`vcrgocgt h`gnomrkct hy tmkdgb dgt` mjj`ugt `l b`vcrgocgt suppiy mgn ncomgn l`r b`vcrgocgth`gns hy ldgmgjdmi dgstdtutd`gs. OjGcids mgn T`sfdg` (81=8) mppidcn Hmycsdmg
cstdomtd`g t` mg `pcg-cj`g`oy nygmodj st`jfmstdj bcgcrmi cqudidhrduo (NZBC) o`nci
2
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
10/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
`l Empmg. ^fcy l`ugn tfmt tfc cocrbcgjc `l cvcg m somii rdsk prcoduo `g b`vcrgocgtncht wdii trdbbcr sdbgdldjmgt dgstmhdidty dg tfc rcmi mgn g`odgmi vmrdmhics. T`sfdg` mgnOdz`bujfd (81=:m) dgvcstdbmtcn tfc lcmturcs `l tfc li`w `l lugns dg Empmg mjr`ss tdoc.^fcy nco`gstrmtcn tfmt mg dgjrcmscn v`iuoc `l j`rp`rmtc smvdgbs wms ncp`sdtcn msidqudn smvdgbs mgn uscn t` purjfmsc Empmgcsc b`vcrgocgt h`gns tfr`ubf ldgmgjdmidgstdtutd`gs vdm tfc li`w `l lugns. ^fcy mis` sf`wcn tfmt tf`sc wf` ncomgn EBHs pimymg dop`rtmgt r`ic dg tfc stmhdidty `l tfc omrkct. Xcjcgtiy, T`sfdg`, mgn \`iiocr (81=>)j`opmrcn Brccjc wdtf Empmg t` cxpimdg wfy Empmg fms g`t yct sullcrcn lr`o m nchtjrdsds cvcg tf`ubf dts br`ss b`vcrgocgt ncht-t`-BNQ rmtd` ds oujf imrbcr tfmgBrccjc—s. Dg Empmg, m imrbc sfmrc `l b`vcrgocgt ncht ds hcdgb fcin n`ocstdjmiiy, tfcrcmrc suhstmgtdmi jcgtrmi hmgk f`indgbs `l b`vcrgocgt ncht, mgn mut`g`o`us o`gctmryp`idjy jmg hc uscn t` cmsc ldgmgjdmi jrdsds. Hmscn `g tfcdr o`nci mgmiysds, tfcy sf`wwfy Empmgcsc n`ocstdj dgvcst`rs f`in sujf fubc mo`ugts `l EBHs. Dt` mgn F`sfd(81=>) uscn m sdouimtd`g octf`n t` scc wfctfcr Empmg—s hunbct ncldjdts mrcsustmdgmhic mgn j`gjiuncn tfmt Empmg—s ldsjmi sdtumtd`g ds dg m nmgbcr`us z`gc.
Qrcvd`us mgmiysds, sujf ms tfmt hy H`fg (=446, 8113) `giy uscn tfc b`vcrgocgt
hunbct j`gstrmdgt l`r tfc stmhdidty `l tfc b`vcrgocgt h`gn omrkct. Dg `ur o`nci, tfcldsjmi sustmdgmhdidty `l b`vcrgocgt h`gns dg Empmg jmg hc cxpimdgcn hy tfc ncomgn l`rb`vcrgocgt h`gns rmtfcr tfmg tfc suppiy. Rc j`gsdncr tfds t` hc rcprcscgtmtdvc `lrcmidty. @ur pmpcr prcscgts m gcw stmhdidty j`gndtd`g l`r tfc h`gn omrkct. Rc mis`prcscgt s`oc ruics l`r ldsjmi stmhdidzmtd`g mgn cxpimdg tfc ldsjmi ruics j`rrcsp`gndgb t`^myi`r—s ruic l`r o`gctmry p`idjy.
:. ^FC XC\DZCN N@OMX J@GND^D@G MGN H@FG—ZJ@GND^D@G J@OHDGDGCN RD^F ^FC H@GNOMXKC^
^fc N`omr j`gndtd`g mgn H`fg—s j`gndtd`g mrc `ltcg uscn t` nctcrodgc wfctfcr hunbctncldjdts mrc sustmdgmhic `r g`t.
^fc N`omr j`gndtd`g ds `htmdgcn lr`o tfc b`vcrgocgt hunbct j`gstrmdgt ms l`ii`ws.
+ ∘= ? Ξ + B`vcrgocgt Hunbct J`gstrmdgt (=)
Cqumtd`g (=) stmtcs tfmt b`vcrgocgt spcgndgb ($+dgtcrcst pmyocgts &∘=$ ? gcw dssuc `l b`vcrgocgt h`gns&Ξ$+ tmx rcvcguc&$.
Ndvdndgb Cqumtd`g (=) hy BNQ () mgn rcwrdtdgb Cqumtd`g (=), wc bct ∘= ?
(∘)=+
∘= + N`omr J`gndtd`g (8)
wfcrc ? ⁎ , ? ∌ ⁎ , ? ⁎ , mgn ? ⁎ Cqumtd`g (=) ncg`tcs tfc b`vcrgocgt hunbct j`gstrmdgt, wfdjf ncsjrdhcs tfc suppiy `l
b`vcrgocgt h`gns. Ndvdndgb Cqumtd`g (=) hy mgn wdtf m lcw trmgsl`romtd`gs, tfcN`omr j`gndtd`g dg Cqumtd`g (8) ds `htmdgcn. Dl tfc dgtcrcst rmtc ds fdbfcr tfmg tfcbr`wtf rmtc `l tfc cj`g`oy, tfc hunbct ncldjdt wdii dgjrcmsc rmpdniy. @g tfc `tfcr fmgn,dl tfc dgtcrcst rmtc ds i`wcr tfmg tfc br`wtf rmtc `l tfc cj`g`oy tfc hunbct ncldjdt wdiij`gvcrbc dg m stmhic omggcr. F`wcvcr, tfc N`omr j`gndtd`g l`juscs `giy `g tfc
6
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
11/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
suppiy `l b`vcrgocgt h`gns mgn n`cs g`t tmkc dgt` mjj`ugt tfc ncomgn l`rb`vcrgocgt h`gns.
>. OM^FCOM^DJMI O@NCI
^fds pmpcr ncsjrdhcs tfc cqumtd`gs `l h`tf tfc b`vcrgocgt h`gn suppiy mgn tfcb`vcrgocgt h`gn ncomgn hmscn `g tfc o`nci sct `ut hy T`sfdg` mgn Odz`bujfd(81=1, 81=:h). @ur o`nci ds suoomrdzcn ms l`ii`ws5
+ ∘= ? ∌ + + ∌ B`vcrgocgt hunbct j`gstrmdgt ? Zuppiy `l b`vcrgocgt h`gns (:)
∌ ? 1 + = Ncomgn l`r b`vcrgocgt h`gns (>)
Lr`o Cqumtd`gs (:) mgn (>), wc `htmdg tfc cqudidhrduo dgtcrcst rmtc `l b`vcrgocgth`gns5
− ? ∘∘∘∌∘ (3)
M sdopic omjr` o`nci tfmt dgjiuncs tfc ncomgn sdnc `l tfc b`vcrgocgt h`gn jmg hcj`gstrujtcn ms l`ii`ws.
Cqumtd`g (:) ds tfc ndsp`smhic dgj`oc, sf`wdgb wmbc dgj`oc, trmgslcr pmyocgts lr`otfc b`vcrgocgt, mgn dgtcrcst rcjcdvcn lr`o b`vcrgocgt h`gns, odgus tmx pmyocgts.^fc ndsp`smhic dgj`oc ds ndstrdhutcn dgt` j`gsuoptd`g mgn smvdgbs. Zmvdgbs mrcmii`jmtcn l`r tfc purjfmsc `l b`vcrgocgt h`gns, l`r o`gcy ncomgn, mgn t` dgjrcmscn`ocstdj ncp`sdts.
Ndsp`smhic dgj`oc ds ncldgcn ms dgj`oc ( ) pius b , tfc dgtcrcst rcjcdvcn lr`ob`vcrgocgt h`gns hy f`uscf`ins (∘=), odgus tfc tmx pmyocgt () ms l`ii`ws. ^fcndsp`smhic dgj`oc ds ndvdncn dgt` j`gsuoptd`g () mgn smvdgbs ()
? + ∘= ? + wfcrc ? Ξ + ∌ + Ξ (
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
12/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
wmgt t` huy o`rc b`vcrgocgt h`gns mgn rcnujc tfc mo`ugt `l ncp`sdts. Mii ncp`sdtsmrc uscn l`r hmgk i`mgs t` smtdsly dgvcstocgt.
Lr`o Cqumtd`gs (.= Xcvdscn N`omr J`gndtd`g J`ohdgcn wdtf tfc H`gn Omrkct
Ldburc 3 sf`ws tfc trcgn `l tfc i`gb-tcro dgtcrcst rmtc (=1-ycmr Empmgcsc b`vcrgocgth`gn ydcin) mgn g`odgmi BNQ br`wtf rmtc `l Empmg. Ms tfc ldburc sf`ws, pmrtdjuimriy
nurdgb 811:‚8114, tfc i`gb-tcro dgtcrcst rmtc mgn g`odgmi BNQ br`wtf rmtc mrcmppr`xdomtciy j`-o`vdgb. ^fc ldburc sf`ws tfmt tfc rmtc `l dgtcrcst cxjccns tfc br`wtfrmtc `l tfc cj`g`oy. Dt subbcsts tfmt tfc Empmgcsc hunbct ds `g mg ugstmhic pmtf,hmscn `g tfc N`omr j`gndtd`g. Mppiydgb tfc N`omr j`gndtd`g mgn tfc jmsc stundcs `lQ`idt` mgn Rdjkcgs (8112), tfc nmtm sf`ws tfc dgstmhdidty `l h`gn ldgmgjdgb dg Empmg.J`opmrcn wdtf tfc stmhdidty j`gndtd`g dg H`fg (=446) mgn `tfcr stundcs, `ur o`ncij`gsdncrs tfc strujturc `l tfc h`gn omrkct. Zdgjc h`tf tfc dgtcrcst rmtc mgn h`gnsuppiy mgn ncomgn mrc cgn`bcg`us dg `ur o`nci, wc jmg dgvcstdbmtc tfc stmhdidtyj`gndtd`g hmscn `g tfc cmjf cj`g`odj vmrdmhic dg tfc cj`g`oy.
=1
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
13/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
Ldburc 35 ^fc Xcmi BNQ Br`wtf Xmtc mgn tfc I`gb-tcro Dgtcrcst Xmtc dg Empmg
BNQ ? br`ss n`ocstdj pr`nujt.
G`tc5 ^fc BNQ br`wtf rmtc l`r cmjf qumrtcr ds j`opmrcn t` tfc prcvd`us ycmr mgn scms`gmiiy mneustcn. ^fcdgtcrcst rmtc ds tfc =1-ycmr Empmgcsc b`vcrgocgt h`gn ydcin.
Z`urjc5 ]umrtcriy cstdomtcs ̀ l BNQ, Cj`g`odj mgn Z`jdmi Xcscmrjf Dgstdtutc (CZXD), Jmhdgct @lldjc ̀ l Empmg;Gdkkcd GCCNZ.
3. LDZJMI Q@IDJT XSIC MGN ^MV XSIC ^@ MJFDC\C
ZSZ^MDGMHDID^T @L ^FC HSNBC^^fc ldsjmi p`idjy ruic jmg hc `htmdgcn ms l`ii`ws.
^fc `hecjtdvc lugjtd`g `l tfc b`vcrgocgt ds sct ms5
( , , ,,∌ ) ? =8=( −)8 + =88
8 + =8:( ∘=)8 + =8>(
∘=)8 + =83(∌ ∌−)8 &=>$
^fc b`vcrgocgt mdos t` stmhdidzc b`vcrgocgt ncht () ms ji`sc ms p`ssdhic t` dtsncsdrcn icvci, wdtf BNQ () ji`sc t` tfc luii copi`yocgt icvci `l BNQ (), mgn wdtf mso``tf jfmgbc `l b`vcrgocgt spcgndgb ( ), so``tf jfmgbc `l tmxmtd`g ( ), mgnso``tf jfmgbc `l tfc li`w `l h`gns (∌). Fcrc ( ? =,⋠ ,3) mrc tfc p`idjy wcdbftstfc b`vcrgocgt jmg sct.Rc odgdodzc tfc i`ss lr`o tfc b`vcrgocgt—s `hecjtdvc lugjtd`g hy ocmgs `lb`vcrgocgt spcgndgb () mgn tfc so``tf jfmgbc `l tmxmtd`g ().odg,
( , , , ,∌ )
?=
8=( −)8 +
=
88
8+
=
8:( ∘=)8 +
=
8>( ∘=)8
+=
83(∌ ∌−)8
= 4 4 3 ] =
= 4 4 3 ] :
= 4 4 < ] =
= 4 4 < ] :
= 4 4 2 ] =
= 4 4 2 ] :
= 4 4 6 ] =
= 4 4 6 ] :
= 4 4 4 ] =
= 4 4 4 ] :
8 1 1 1 ] =
8 1 1 1 ] :
8 1 1 = ] =
8 1 1 = ] :
8 1 1 8 ] =
8 1 1 8 ] :
8 1 1 : ] =
8 1 1 : ] :
8 1 1 > ] =
8 1 1 > ] :
8 1 1 3 ] =
8 1 1 3 ] :
8 1 1 < ] =
8 1 1 < ] :
8 1 1 2 ] =
8 1 1 2 ] :
8 1 1 6 ] =
8 1 1 6 ] :
8 1 1 4 ] =
8 1 1 4 ] :
8 1 = 1 ] =
8 1 = 1 ] :
8 1 = = ] =
8 1 = = ] :
8 1 = 8 ] =
8 1 = 8 ] :
8 1 = : ] =
8 1 = : ] :
-=1
-6
-<
->
-8
1
8
>
<%
Dgtcrcst rmtc
BNQ br`wtf rmtc
==
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
14/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
^fc ldrst-`rncr j`gndtd`gs mrc5
? =( −) + 8
+ :( ∘=) + 3(∌ ∌−) ∌
? 18 (=3)
? =( −) + 8 + >( ∘=) + 3(∌ ∌−) ∌ ? 1
:
(= 81=>, m pcrd`n wfdjf dgjiuncs tfc p`st-huhhic crm `l tfc Empmgcsc cj`g`oy, tfc =442‚=446 Msdmg ldgmgjdmi jrdsds, tfc 8116‚8114 bi`hmi ldgmgjdmi jrdsds, mgn tfc 81== Brcmt Cmst Empmg cmrtfqumkc mgn tsugmod.
^fc b`vcrgocgt cxpcgndturc uscn dg `ur copdrdjmi survcy ds tfc t`tmi puhidj ncomgnmgn tmx ds tfc t`tmi b`vcrgocgt tmx rcvcguc, h`tf scms`gmiiy mneustcn. O`gcy ncomgn
8
? ∘
+ =,
? (+)+
∌ , ∌
? ∘
+ =
: ? ∘ + = ,
? (+)+∌ , ∌ ?
∘+ =
=8
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
15/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
ds O8, tfc mvcrmbc mo`ugt `l `utstmgndgb o`gcy st`jk hmscn `g tfc ycmr-`g-ycmrjfmgbc. L`r tfc `utstmgndgb h`gns wc uscn tfc t`tmi `utstmgndgb EBHs mgn `tfcrh`rr`wdgbs `l tfc Empmgcsc b`vcrgocgt. J`gsuoptd`g ds prdvmtc j`gsuoptd`g, dgj`ocds BNQ, mgn dgvcstocgt ds prdvmtc dgvcstocgt, mii scms`gmiiy mneustcn mgn dg rcmi tcros,nclimtcn hy tfc BNQ nclimt`r (8114?=11). ^fc gcwiy dssucn h`gns mrc tfc gcw dssucs`l puhidj h`gns mgn gcw dssucs `l b`vcrgocgt h`gns. ^fc s`urjcs `l tfc nmtm mrc tdocscrdcs nmtm lr`o tfc Hmgk `l Empmg (H@E), Dgtcrgmtd`gmi Ldgmgjdmi Ztmtdstdjs (DLZ) `l tfcDgtcrgmtd`gmi O`gctmry Lugn (DOL), Cj`g`odj mgn Z`jdmi Xcscmrjf Dgstdtutc (CZXD), tfcEmpmgcsc Jmhdgct @lldjc, Gdkkcd GCCNZ, mgn @CJN Cj`g`odj @uti``k.
^` cvmiumtc tfc stmtd`gmrdty `l tfc scrdcs, wc uscn mg mubocgtcn Ndjkcy‚Luiicr tcst.^fc rcsuits subbcst tfmt vmrdmhics l`r `utstmgndgb b`vcrgocgt h`gns, dgvcstocgt,dgtcrcst rmtc, mgn prdvmtc ncp`sdts mrc g`g-stmtd`gmry dg icvci. F`wcvcr, wfcg wcmppidcn tfc ugdt r``t tcst t` tfc ldrst ndllcrcgjc `l tfc vmrdmhics, wc wcrc mhic t` rcecjttfc guii fyp`tfcsds `l ugdt r``ts l`r cmjf `l tfc vmrdmhics. ^fcsc rcsuits subbcst tfmttfc b`vcrgocgt h`gn, dgvcstocgt, dgtcrcst rmtc, mgn prdvmtc ncp`sdt vmrdmhics cmjfj`gtmdg m ugdt r``t. @gjc tfc ugdt r``t tcst wms pcrl`rocn mgn dt wms ndsj`vcrcn tfmt
tfc vmrdmhics wcrc g`g-stmtd`gmry dg icvci mgn stmtd`gmry dg tfc ldrst ndllcrcgjcs, tfcywcrc dgtcbrmtcn `l `rncr =. Fcgjc, vmrdmhics wdii mppcmr dg tfc cj`g`octrdj o`nci dgldrst ndllcrcgjcs. Rc uscn `rndgmry icmst squmrcs (@IZ) dg `rncr t` rug tfc rcbrcssd`gsl`r cmjf cqumtd`gs. Rc uscn tfc Mkmdkc Dgl`romtd`g Jrdtcrd`g t` scicjt tfc imb `rncrs.
Qrd`r t` ruggdgb tfc rcbrcssd`gs wc pi`ttcn Ldburcs 111
J f m g b c s d g s m v d g b
Jfmgbcs dg ndsp`smhic Dgj`oc
=:
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
16/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
Ldburc 25 Jfmgbcs dg Dgj`oc vcrsus Qrdvmtc j`gsuoptd`g
Ldburc 65 Jfmgbcs dg Dgj`oc vcrsus Ncp`sdts
.G`tc5 Ncp`sdts ? smvdgb ‚ ncomgn l`r b`vcrgocgt h`gns
Nmtm p`dgts l`r 8111]= mgn 811=]= mrc g`t sf`wg ms tfcy mrc `utsdnc tfc ldburc.
Z`urjc5 Gdkkcd GCCNZ.
L`r tfc `utidcr p`dgts, wfdjf wcrc omdgiy l`ugn nurdgb tfc jrdsds pcrd`ns, wc ncldgcn mnuooy vmrdmhic l`r cmjf `l tfc rcimtcn cqumtd`gs.
Hci`w mrc tfc rcsuits `l tfc rcbrcssd`gs5
Cq. >5 Ncomgn l`r b`vcrgocgt h`gns5 ( ) )(=::336>>>:41t t
r H +?∌
Cq. 25 Dgvcstocgt lugjtd`g5 [ _)(8=8363=3:)(t t
r D ∌∘?∌
Cq. 65 J`gsuoptd`g cqumtd`g5 )(3:.14>>3t t
TNJ +?
Cq. 45 Ncp`sdt cqumtd`g5 )(]8
=442]=
=446]8
8111]8
8113]>
8116]8
8116]:8114]=
-1
-:1
-81
-=1
1
=1
81
:1
>1
31
-2111 -3111 -:111 -=111 =111 :111
J f m g b c s d g n c p ` s d t s
Jfmgbcs dg ndsp`smhic dgj`oc
=>
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
17/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
Ldburc 45 Empmgcsc Xcmi Qrdvmtc J`gsuoptd`g mgn Xcmi F`uscf`in Zmvdgbsms m Qcrjcgtmbc `l Xcmi Ndsp`smhic Dgj`oc, ]= =44>‚]= 81=:
Z`urjc5 Gdkkcd GCCNZ
J`gscqucgtiy wc jmijuimtc tfc b`vcrgocgt spcgndgb ruic (Cqumtd`g =2) mgn tmxmtd`gruic (Cqumtd`g =6) hmscn `g `ur o`nci hy mssuodgb tfmt tfc ldvc p`idjy wcdbfts dg `urb`vcrgocgt `hecjtdvc lugjtd`g mrc cqumi t` 1.8, mgn tfmt nurdgb 81=>‚81:1 tfcEmpmgcsc rcmi BNQ br`ws mggumiiy hy 8% lr`o tfc prcvd`us ycmr. Ldburc =1 sf`ws tfcpmst mjtumi b`vcrgocgt spcgndgb mgn tmx rcvcguc `l tfc Empmgcsc b`vcrgocgt (]8=44>‚]> 81=:) mgn tfc pr`ecjtcn b`vcrgocgt spcgndgb mgn tmx rcvcguc (]= 81=>‚]>81:1) hmscn `g `ur o`nci.
Ldburc =15 B`vcrgocgt Cxpcgndturc mgn ^mx Xcvcguc
G`tc5 ^fc brmy sfmncn mrcm dgndjmtcs tfc pr`ecjtcn vmiucs. ^fc iclt-fmgn mxds dgndjmtcs b`vcrgocgtcxpcgndturcs (prdomry cxpcgscs) mgn tmx rcvcguc, mgn tfc rdbft-fmgn mxds dgndjmtcs tfc mjjuouimtcnh`gns/rcmi qumrtcriy BNQ.
Z`urjc5 Xmw nmtm mrc lr`o Gdkkcd GCCNZ, pr`ecjtd`g vmiucs mrc j`opdicn hy tfc mutf`rs.
Ms diiustrmtcn dg Ldburc =1, dg `rncr t` mjt ms pcr tfc `ptdomi ldsjmi p`idjy ruic pr`vdncndg tfds pmpcr mgn dg `rncr t` rcnujc tfc mo`ugt `l gmtd`gmi ncht lr`o dts prcscgt fdbf
1
1.=
1.8
1.:
1.>
1.3
1.<
1.2
1.6
1.4
= 4 4 >
] =
= 4 4 >
] >
= 4 4 3
] :
= 4 4 <
] 8
= 4 4 2
] =
= 4 4 2
] >
= 4 4 6
] :
= 4 4 4
] 8
8 1 1 1
] =
8 1 1 1
] >
8 1 1 =
] :
8 1 1 8
] 8
8 1 1 :
] =
8 1 1 :
] >
8 1 1 >
] :
8 1 1 3
] 8
8 1 1 <
] =
8 1 1 <
] >
8 1 1 2
] :
8 1 1 6
] 8
8 1 1 4
] =
8 1 1 4
] >
8 1 = 1
] :
8 1 = =
] 8
8 1 = 8
] =
8 1 = 8
] >
%
Xcmi prdvmtc j`gsuoptd`g/ Xcmi ndsp`smhic
dgj`oc
Xcmi smvdgb/ Xcmi ndsp`smhic dgj`oc
1%
811%
>11%
1.11
= 4 4 > ] 8
= 4 4 3 ] 8
= 4 4 < ] 8
= 4 4 2 ] 8
= 4 4 6 ] 8
= 4 4 4 ] 8
8 1 1 1 ] 8
8 1 1 = ] 8
8 1 1 8 ] 8
8 1 1 : ] 8
8 1 1 > ] 8
8 1 1 3 ] 8
8 1 1 < ] 8
8 1 1 2 ] 8
8 1 1 6 ] 8
8 1 1 4 ] 8
8 1 = 1 ] 8
8 1 = = ] 8
8 1 = 8 ] 8
8 1 = : ] 8
8 1 = > ] 8
8 1 = 3 ] 8
8 1 = < ] 8
8 1 = 2 ] 8
8 1 = 6 ] 8
8 1 = 4 ] 8
8 1 8 1 ] 8
8 1 8 = ] 8
8 1 8 8 ] 8
8 1 8 : ] 8
8 1 8 > ] 8
8 1 8 3 ] 8
8 1 8 < ] 8
8 1 8 2 ] 8
8 1 8 6 ] 8
8 1 8 4 ] 8
8 1 : 1 ] 8
¥ t r d i i d ` g
B`vcrgocgt cxpcgndturcs ^mx rcvcguc Mjjuouimtcn h`gn/Xcmi qumrtcriy BNQ
Qr`ecjtd`g
=3
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
18/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
icvci, Empmgcsc b`vcrgocgt cxpcgndturc gccns t` hc rcnujcn nrmstdjmiiy mgn tfcb`vcrgocgt tmx rcvcguc gccns t` sfdlt upwmrn. ^fds ocmgs tfmt h`tf sdncs `l tfchunbct gccn t` hc mneustcn sdouitmgc`usiy (cxpcgndturc mgn rcvcguc) dg `rncr t`mjfdcvc ldsjmi sustmdgmhdidty. Lurtfcr, ms ds mppmrcgt lr`o tfds ldburc, tfc ncjrcmsc dgcxpcgndturc gccns t` hc o`rc tfmg tfc dgjrcmsc `g tfc rcvcguc sdnc. Ms pcr `urjmijuimtd`gs l`r 81=>‚81:1, tfc Empmgcsc b`vcrgocgt gccns t` jut cxpcgndturc hy>3% mgn rmdsc tmx rcvcguc hy :6%, l`r tfc purp`sc `l ldsjmi sustmdgmhdidty. L`r tfds,mmjjuouimtcn b`vcrgocgt h`gns/rcmi BNQ gccns t` hc rcnujcn lr`o 886% dg ]>81=: t` =4 81:1.
2. J@GJISZD@G
^fds pmpcr mnnrcsscs tfc dssuc tfmt tfc j`gvcgtd`gmi N`omr j`gndtd`g l`r tfc stmhdidty`l tfc hunbct ds `htmdgcn `giy lr`o tfc suppiy sdnc l`r b`vcrgocgt h`gns, gmociy tfcb`vcrgocgt hunbct j`gndtd`g. Dt ds dop`rtmgt t` mis` tmkc dgt` mjj`ugt tfc ncomgn sdnc
`l b`vcrgocgt h`gns. Empmg mgn Brccjc fmvc h`tf mjjuouimtcn m imrbc mo`ugt `lb`vcrgocgt ncht, hut Brccjc wcgt hmgkrupt wfcrcms Empmg—s ncht fms hccgsustmdgmhic. Rc fmvc sf`wg tfmt tfc ncomgn strujturc `l b`vcrgocgt h`gns dg Empmgds n`odgmtcn hy n`ocstdj dgvcst`rs. @g tfc `tfcr fmgn, dg Brccjc, ncomgn dsn`odgmtcn hy `vcrscms dgvcst`rs. ^fds fdbf rmtd` `l `vcrscms dgvcst`rs wms tfc jmusc`l tfc dgjrcmsc dg tfc dgtcrcst rmtc `l b`vcrgocgt h`gns dg Brccjc.
Ms H`fg—s j`gndtd`g n`cs g`t smtdsly cj`g`odj rcj`vcry mgn `giy bdvcs tfc j`gndtd`g t`rctmdg tfc hunbct hmimgjc, tfc `ptdomi b`vcrgocgt spcgndgb ruic mgn tmx rcvcguc ruicfmvc t` hc `htmdgcn. ^fc `ptdomi ldsjmi p`idjy ruic fms t` cxmodgc f`w b`vcrgocgtncht ndvcrbcs lr`o tfc ncsdrcn icvci, f`w tfc li`w `l tfc b`vcrgocgt hunbct ncldjdtndvcrbcs lr`o tfc ncsdrcn icvci, mgn tfc BNQ bmp. ^fc gcw ldsjmi p`idjy ruic `htmdgcndg tfds pmpcr smtdsldcs tfc j`gndtd`gs l`r h`tf tfc stmhdidty `l tfc hunbct mgn tfc rcj`vcry
`l tfc cj`g`oy mt tfc smoc tdoc.
J`gscqucgtiy, tfc copdrdjmi ldgndgbs sf`w tfmt dg `rncr t` mjfdcvc ldsjmi sustmdgmhdidtyhmscn `g tfc `ptdomi ldsjmi p`idjy ruic pr`p`scn dg tfds pmpcr, h`tf sdncs `l tfcEmpmgcsc b`vcrgocgt hunbct (cxpcgndturc mgn rcvcguc) gccn t` hc mneustcnsdouitmgc`usiy. ^fc rcsuits sf`w tfmt tfc ncjrcmsc dg b`vcrgocgt cxpcgndturc fms t`hc t` o`rc tfmg tfc dgjrcmsc dg tmx rcvcguc.
=
8/20/2019 Optimal Fiscal Policy Rule for Achieving Fiscal Sustainability: A Japanese Case Study
19/19
MNHD R`rkdgb Qmpcr 3:= T`sfdg`, Odz`bujfd, mgn ^mbfdzmncf-Fcsmry
XCLCXCGJCZ
H`fg, F. =446. ^fc Hcfmvd`r `l SZ Quhidj Ncht mgn Ncldjdts. ]umrtcriy E`urgmi ̀ l
Cj`g`odjs ==:(:)5 4>4‚4>>. ^fc Hurncg `l tfc Ncht mgn tfc Gmtd`gmi Dgj`oc. MocrdjmgCj`g`odj Xcvdcw :>(>)5 246‚682.
OjGcids, Q., mgn G. T`sfdg`. 81=8. Omjr`cj`g`odj \`imtdidty ugncr Fdbf Mjjuouimtd`g`l B`vcrgocgt Ncht5 Icss`gs lr`o Empmg. Mnvmgjcs dg J`opicx Zystcos =3(Zuppi. G`.8)5 =831132-=‚=831132-84.
F`sfd, ^., mgn ^. Dt`. 81=>. Nclydgb Brmvdty5 Jmg Empmgcsc Z`vcrcdbg Ncht J`gtdguc t`
Dgjrcmsc wdtf`ut m Jrdsds0 Cj`g`odj Q`idjy E`urgmi 84(2)5 3‚>>.
T`sfdg`, G., mgn ^. Odz`bujfd. 81=1. ^fc X`ic `l Quhidj R`rks dg tfc Q`idtdjmiHusdgcss Jyjic mgn tfc Dgstmhdidty `l tfc Hunbct Ncldjdts dg Empmg. MsdmgCj`g`odj Qmpcrs 4(=)5 4>‚==8.
T`sfdg`, G., mgn ^. Odz`bujfd. 81=:m. Jfmgbc dg tfc Li`w `l Lugns mgn tfc LdsjmiXuics Gccncn l`r Ldsjmi Ztmhdidzmtd`g. Quhidj Q`idjy Xcvdcw 6(. ^fc Z`vcrcdbg Ncht Jrdsds5 Rfy Brccjc, hut g`t
Empmg0 Msdm Cur`pc E`urgmi =8(:)5 :83‚:>=.
T`sfdg`, G., mgn L. ̂ mbfdzmncf-Fcsmry. L`rtfj`odgb. Empmg—s I`st Ncjmnc5 Jmuscs,J`gscqucgjcs mgn Xcocndcs. Cj`g`odj mgn Q`idtdjmi Ztundcs > (8)5 Euiy 81=m. ^frcc Mrr`ws `l ’Mhcg`odjs‟ mgn tfcZtrujturmi Xcl`ro `l Empmg5 Dglimtd`g ^mrbctdgb Q`idjy `l tfc Jcgtrmi Hmgk,Ldsjmi J`gs`idnmtd`g, mgn Br`wtf Ztrmtcby. MNHD R`rkdgb Qmpcr >48. ^`ky`5 Msdmg Ncvci`pocgt Hmgk Dgstdtutc.
T`sfdg`, G., mgn L. ^mbfdzmncf-Fcsmry. 81=>h. Mg Mgmiysds `l Jfmiicgbcs Lmjcn hyEmpmg—s Cj`g`oy mgn Mhcg`odjs. ^fc Empmgcsc Q`idtdjmi Cj`g`oy >15:‚>,:2‚
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