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The Outlook for Financing Japan's Public Debt
Author:
Kiichi Tokuoka
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Series:
IMF Working Papers
Volume/Issue:
Volume 2010: Issue 019
Language:
English
Publication Date:
01 Jan 2010
DOI:
https://doi.org/10.5089/9781451962260.001
ISBN:
9781451962260
ISSN:
1018-5941
Pages:
24
Keywords:
WP; JGB yield; deficit; bond yield; yield; Public debt; fiscal deficits; Japanese government bonds; yields; JGB market; FILP issue; fiscal deficit; FILP liability; gross debt; Bond yields; Government debt management; Sovereign bonds; Flow of funds; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Despite the rapid rise in public debt and large fiscal deficits, Japanese Government Bond (JGB) yields have remained fairly stable. Possible factors include: Japan's sizeable pool of household savings, presence of large and stable institutional investors, and strong home bias. These factors are likely to persist for some time, but going forward, the market's capacity to absorb debt is likely to diminish, as population aging reduces savings inflows and financial reforms enhance risk appetite. This could in turn strengthen the link between JGB yields and the stock of public debt. In light of these structural changes in the market, fiscal consolidation will be key for maintaining market stability.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2010: Issue 019