This paper reconsiders Japan’s fiscal sustainability. We investigate whether a simulation conducted under the political constraint imposed by a fiscal reaction function supports the official projection. First, we obtain Japan’s fiscal reaction function by estimating the response of the primary surpluses to the past debt for a panel data set of 23 OECD countries. Next, we investigate the political feasibility of the official projection using our estimated reaction function. When the Cabinet Office criterion is used for the debt-to-GDP ratio, the government can attain the policy target of nonnegative fiscal surpluses and realize fiscal sustainability. Notably, the negative growth-adjusted bond yield and the high growth rate contribute to this finding.

本文重新考虑了日本的财政可持续性。我们调查在财政反应功能施加的政治约束下进行的模拟是否支持官方预测。首先，我们通过对23个经合组织国家的面板数据集估算原始盈余对过去债务的反应来获得日本的财政反应函数。接下来，我们使用估计的反应函数研究官方预测的政治可行性。如果将内阁办公室标准用于债务与GDP的比率，则政府可以实现非负财政盈余的政策目标，并实现财政可持续性。值得注意的是，负增长调整债券收益率和高增长率促成了这一发现。