Theoretical analyses of fiscal consolidation from the perspective of both social welfare and the fair distribution of welfare across generations.

2022 Fiscal Year Final Research Report

• Project/Area Number: 20K13455
• Research Category: Grant-in-Aid for Early-Career Scientists
• Allocation Type: Multi-year Fund
• Review Section: Basic Section 07010:Economic theory-related
• Research Institution: The University of Kitakyushu
• Principal Investigator: Maebayashi Noritaka 北九州市立大学, 経済学部, 准教授 (30735733)
• Project Period (FY): 2020-04-01 – 2023-03-31
• Keywords: 財政再建 / 財政規律 / 公債の持続可能性 / 経済成長 / 経済厚生 / 世代間の公正性

Outline of Final Research Achievements

This study investigates expenditure- and tax-based consolidations under the rule of reductions in debt-to-GDP ratios to the target level and the effects of these consolidations on fiscal sustainability and welfare. We find that expenditure-based consolidation is more likely to make fiscal policy sustainable than tax-based consolidation. As for welfare, countries may differ in their choice of the type of consolidation, which depends on the size of outstanding debts relative to capital, the economy’s productivity, tax rate levels, and the extent of utility from public goods. More importantly, it may also depend on whether policymakers emphasize social welfare or fairness of welfare distribution between generations. By contrast, a common result on welfare is that fiscal consolidation cannot persist much longer. Theoretical implications for fiscal management in countries that have recently been promoting greater financial literacy are also presented.

Free Research Field

マクロ経済学、財政学

Academic Significance and Societal Importance of the Research Achievements

本研究の貢献は、既存研究では行われてこなかった異世代間の負担の公正性および経済厚生の改善という両観点から財政再建の具体的な方法（歳出削減か増税のどちらが望ましいのか）やそのスパン（どの程度の速さで財政再建を行うか）について精緻な理論的分析を解析的かつ定量的に行い、上記に示したようにある程度の理論的帰結を提示したことである。さらに、国債残高対GDP比の上位5か国のデータに基づいて、それぞれの国ごとに政策的なインプリケーションを示せたことにある。