Masaya Sakuragawa

Fiscal Sustainability of Japan: A Dynamic Stochastic General Equilibrium Approach

The purpose of this paper is to investigate the fiscal sustainability of Japan by applying a dynamic stochastic general equilibrium model to the Japanese economy. By introducing intermediation costs into the model, we succeed in explaining the observed relationship between the interest and GDP growth rates, which is crucial in testing for sustainability. When the projected real growth rate is 2.5%, the average real interest rate becomes 2.57%, and the debt-to-GDP ratio gradually increases stochastically so that government debt is not sustainable. To recover sustainability, the primary surplus must be 0.2% of GDP.

Land-Tax, Transfer and Growth in an Endogenously Growing Economy with Overlapping Generations

In this paper we investigate the effect of a tax on land rent on the growth rate of capital in a growing economy with overlapping generations. A tax on land rent has a potential to increase the growth rate of capital. If the model is extended to allow the tax revenue to be refunded to individuals, a tax on land rent may deter growth to the extent that the tax revenue is transferred to the older generation. JEL Classification numbers: H31, O41.

Land Price, Collateral and Economic Growth

This paper extends Kiyotaki and Moores (1997) to an endogenous growth model and investigates the dynamic properties of a growing economy with binding credit constraint when land is used not only as an input of production but also as collateral. There exists a balanced growth path in an economy with binding credit constraint. In response to a once and for all productivity shock, the developed model shows the propagation mechanism among output, capital, bank credit and the land price in terms of the growth rate. The models tractability allows us to derive interesting qualitative and quantitative findings on business cycles.

Labor force ageing and economic growth in Japan

This book is a concerted attempt by economists to investigate and offer remedies for some of the difficulties associated with an ageing labor market.

Redistribution Policies under Capital Market Imperfection

We establish the existence and stability of the long-run wealth distribution in a credit constrained economy by applying the monotonicity condition developed by H. Hopenhayn and E. Prescott. There should emerge an egalitarian society in which all families experience upward and downward mobility, although a society of persistent inequality may occur in which rich entrepreneurs and poor lenders remain immobile between classes. The speed of transition from the latter to the former is shown to depend on the design of redistribution policies. Simulation results show that this occurs more rapidly when the government favours relatively rich lenders.

A Characterization of the Dynamical System in a Two-sector Overlapping-generations Model: The Case of Unbounded Growth

This paper characterizes perfect-foresight equilibria in a two-sector overlapping-generations economy for the case of unbounded growth. The analysis demonstrates that gross substitutability in consumption is not sufficient to ensure the determinacy of equilibrium. Unlike Boldrin and Rustichini (1994), indeterminacy of equilibria can arise within the framework of an overlapping-generations model with convex technology. The finite time horizon of agents is the source of such indeterminacy. JEL Classification Number: 041.

Long‐run Growth and Intragenerational Transfer Under Capital Market Imperfections

The purpose of this paper is to provide a long-run growth model linking growth to income distribution between lenders and borrowers in an environment where enforcement of loan contracts is imperfect. The equilibrium under costly verification implies a smaller growth rate, relative to the symmetric-information economy. Intra-generational transfer of income is shown to promote growth so long as the redistribution gives rise to an increase in net worth positions of borrowers. JEL Classification Numbers: G21, O16, O40