Sustainability Analysis Of Japanese Government Debt

According to the 2020 global debt monitor report released by the institute of international finance(IIF),global debts reach $252.6 trillion,and debt /GDP is globally at an all-time high of 322% by the end of the third quarter of 2019.The burden of public debts is becoming a growing problem around the world,with Japan the worst.According to the international monetary fund,the ratio of Japan's general government debts to GDP is 237% at the end of 2018,the highest in the world.Japanese government has long tried to improve its fiscal situation and debt problem,but to little effect.As the largest indebted country around the world,whether Japanese government debts are sustainable has become a widespread concern of the international community.It is of great significance to study on the sustainability of government debts for a country to control the scale of debts and adjust the structure of fiscal revenue and expenditure.It can also offer lessons for easing government debt burden around the world.This paper summarizes and sorts out relevant studies on government debts and the sustainability of Japanese government debts at home and abroad,reveals that the main reasons for the huge scale of Japanese government debts are the sufficient savings of the Japanese household sector,the low Treasury bond yield and the increasing fiscal deficit,and put forward the potential risks of Japanese government debts.This paper studies the fiscal expenditure policy of Japan in each period and summarizes the economic effect of the policy.Relevant gross and structural indicators are selected to analyze Japan's financial situation and debt problem.The findings suggest that Japan is fiscally fragile and has a serious government debt crisis.In order to further obtain the debt ceiling of Japan,this paper,based on the dynamic assumption of Japanese government debts and given the debt constraint ceiling,draws the conclusion that Japanese government debts are unsustainable by calculating the government debts /GDP and the financial assets /GDP of the household sector in a long period from now to the future.This paper estimates that Japanese net government debt ratio will reach a peak of 262% in 2029.After 2029,Japanese net debt ratio will exceed the maximum net debt ratio,making Japanese government debts unsustainable.Finally,this paper summarizes the Japanese government debts,and draws inspiration from Japan's fiscal experience.