Current Account and Fiscal Policy in Japan: 1885–1991 |
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Authors: | Mollick André Varella |
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Institution: | (1) Institute of Policy and Planning Sciences, University of Tsukuba, Tennodai 1-1-, 1, Tsukuba-shi, Ibaraki-ken, 305, Japan |
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Abstract: | This paper explores the empirical relationship between the current account balance and macroeconomic series for the Japanese economy over the years 1885–1991. The long-run equilibrium depends on which series (public debt or budget deficits) affects assets relative to a capital stock rate. Departing from the Ricardian Equivalence structure (no bequest motives), fiscal policy in Japan is shown to be more related to the current account when policy is introduced by shifts in tax revenues rather than by changes in national debt. |
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Keywords: | current account fiscal policy debt deficits long-run equilibrium |
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