Yamada Tomoaki    Department   Undergraduate School  , School of Commerce    Position   Professor
Date	2013/06
Presentation Theme	Achieving Fiscal Balance in Japan
Conference	Society for Economic Dynamics 2013
Conference Type	International
Presentation Type	Speech (General)
Contribution Type	Collaborative
Publisher and common publisher	Selahattin Imrohoroglu, Sagiri Kitao
Details	Japan's population is aging fast and the ratio of Japanese Government Bonds (JGBs) to GDP is highest among advanced economies. In addition, further government spending is expected, causing concerns about the potential for JGBs to become a significant global issue. In this paper we build a micro-data based, large-scale overlapping generations model for Japan in which individuals differ in age, gender, employment type, income, and asset holdings, and incorporate the Japanese pension rules in detail. We estimate age-consumption and age-earnings profiles from micro data, assume complete markets and use these to generate tax revenues and transfer payments for government accounts. We calibrate the model so that it replicates the main macroeconomic and fiscal indicators for 2010. Using existing pension law and fiscal parameters and the medium variants of fertility and survival probability projections, we produce future time paths for JGBs and the pension fund.