The Implications of a Graying Japan for Government Policy

53 Pages Posted: 4 Apr 2015

See all articles by R. Braun

R. Braun

Federal Reserve Bank of Atlanta

Douglas H. Joines

University of Southern California - Marshall School of Business

Date Written: November 1, 2014

Abstract

Japan is in the midst of a demographic transition that is both rapid and large by international standards. As recently as 1990, Japan had the youngest population among the Group of 6 large, developed countries. However, the combined effects of aging of the baby boomer generation and low fertility rates have produced very rapid aging. Japan now finds itself with the oldest population among the Group of 6, and its population will continue to age at a rapid pace in future years. Aging is already placing a burden on government finances, and Japan's ability to confront the negative fiscal implications of future aging is constrained by its very high debt-to-GDP ratio. We find that Japan faces a severe fiscal crisis if remedial action is not undertaken soon, and we analyze alternative strategies for correcting Japan's fiscal imbalances.

Keywords: Japan, fiscal policy, aging, government

JEL Classification: E62, H51, H55, H63

Suggested Citation

Braun, R. and Joines, Douglas H., The Implications of a Graying Japan for Government Policy (November 1, 2014). FRB Atlanta Working Paper No. 2014-18, Available at SSRN: https://ssrn.com/abstract=2580457 or http://dx.doi.org/10.2139/ssrn.2580457

R. Braun (Contact Author)

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Douglas H. Joines

University of Southern California - Marshall School of Business ( email )

Hoffman Hall 702 H
Los Angeles, CA 90089
United States
213-740-6510 (Phone)
213-740 6650 (Fax)

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