Analysis Of The Fiscal Reconstruction And Its Effect In Japan

Reviewing the processing of finance in Japan after World WarⅡ, it has gonethrough procedures that a balance to imbalance, efforts of fiscal reconstruction,dilemma of fiscal situation and fiscal reconstruction again. Throughout the entireprocess of fiscal reconstruction in Japan, there are some experiences, but in general, ithas not materialized so far. This is mainly determined by two factors, the first iseconomic, and the second is the system. From the aspect of economic, financialsituation that caught in poor condition is always along with economic recession. Thishas resulted in contradictions—to stimulate the economy need expanding fiscalspending, that is expansionary fiscal policy, however, increasing revenue to improvethe financial indicators need compressing expenditure. In this conflict, the fiscalreconstruction plan or process cannot be implemented successfully. From the aspect ofinstitution, as in the formulation of fiscal policy in Japan, not only take the civilinterest into consideration, but also affected such as "family of Posts andTelecommunications","Road Clan" and other interest groups, resulting in financialrevenue and expenditure irrationally. To sum up, the system factors is thecontradiction between individual rationality and collective rationality.This paper summarizes the reasons for Japan’s fiscal crisis, including economicdownturn continuously, lack of fiscal discipline, investment multiplier effectweakened, and a large-scale fiscal expenditure rigidly. Generalize the performance ofthe financial crisis, including the budget deficit highly, dependence on debtexcessively, the debt burden seriously and the ratio of debt fees heavily. In thiscondition, describes the relationship between the solution of the financial crisis andfiscal reconstruction. With the central government and local governments as thesubjects, analysis on the path, measures and effects of Japan’s fiscal reconstruction.On this basis, drawing on its experience and lessons presented to promote our fiscalsystem to prevent and respond to outbreaks of local debt risk.This paper consists of four parts: The first part includes Chapter1, namely the introduction. This part describes thesignificance of this study, reviews previous studies and points out that the structure ofthis paper composition.The second part includes Chapter2. What is a general analysis of the financialreconstruction that includes the connotation of financial and fiscal reconstruction, thefactors that lead to fiscal reconstruction, as well as ways to achieve fiscalreconstruction and a brief analysis of the usual measures what being taken.The third part is the main constitution of this article, including3,4,5chapter whatintroduces the Japan’s fiscal crisis, the reasons and the situation at this stage, andexplains the relationship between the financial crisis and solve financialreconstruction. On the basis of the foregoing analysis on the path and initiatives, thispart studies the effect of Japan’s fiscal reconstruction, finally.The fourth part is the last chapter that is mainly based on the foregoing analysis. Itsummarizes the experience of Japan’s fiscal reconstruction and put forward somereferenced ideas what is conducive to our financial system and helpful to preventingthe local debt risk outbreak.