The total amount of Japan's local government (LG) expenditures exceeds its central government (CG) expenditures. Japan's LG and CG are responsible for the worst general government's debt situation among the G7 countries. The paper elucidated the fiscal reactions of Japan's prefecture governments (PGs) based on Bohn's (1998a, 2005) method with a panel dataset (44PGs, fiscal years 1974–2016), addressing nonstationary and endogeneity issues. In my model, a positive reaction of the primary surplus/gross regional product (GRP) ratio to the PG debt/GRP ratio (d) constitutes a sufficient condition for sustainability. The results of the study demonstrate the following: (i) the PG in any fiscal condition are assumed to provide sustainable fiscal management; (ii) the PGs in sounder or more dire fiscal conditions probably manage their finances more firmly; (iii) the fiscal transfers from the CG generally ease the PG fiscal conditions; (iv) although primary regressors d and dsq (the square of d) are assumed to be I (1) with some accuracy, they become stationary through cointegration with other regressors.

中文翻译：

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日本地方政府的财政可持续性†

日本地方政府（LG）支出总额超过了中央政府（CG）支出。日本的LG和CG造成了G7国家中最糟糕的政府债务状况。这篇论文阐明了基于Bohn（1998a，2005）方法和面板数据集（44PGs，1974–2016财政年度）的日本县政府（PGs）的财政反应，解决了非平稳性和内生性问题。在我的模型中，主要盈余/地区生产总值（GRP）比率与PG债务/ GRP比率（d）构成了可持续性的充分条件。研究结果表明：（i）假定在任何财务状况下的PG都可以提供可持续的财务管理；（ii）PG在更健全或更严峻的财政状况下可能会更牢固地管理其财务；（iii）来自企业集团的财政转移通常会缓解企业集团的财务状况；（iv）尽管初级回归变量d和dsq（d的平方）被假定为I（1），但在某种程度上还是准确的，但它们通过与其他回归变量协整而变得平稳。