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Japan: Selected Issues
Author:
International Monetary Fund. Asia and Pacific Dept
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2013: Issue 254
Language:
English
Publication Date:
05 Aug 2013
DOI:
https://doi.org/10.5089/9781475563795.002
ISBN:
9781475563795
ISSN:
1934-7685
Pages:
61
Keywords:
ISCR; CR; bank; GDP; Japan; worker; inflation dynamics; labor market duality; copayment rate; BoJ purchase; Japanese bank; Labor markets; Long term interest rates; Aging; Employment protection; Global; Asia and Pacific
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This Selected Issues paper examines implications for long-term bond yields in case of Japan. The analysis finds that so far, upward pressure on interest rates from high public debt has been offset by domestic factors, including a stable investor base with a preference for safe assets. As these effects could decline with population aging, yields could rise unless reforms are implemented to stimulate growth and reduce the public debt-to-GDP ratio. In such a scenario, long-term Japanese government bond rates would remain relatively low and stable. The paper also analyzes to what extent rising health care spending poses a fiscal risk to Japan’s economy.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund