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An Optimal Rate of the National Burden in an Aging Japan

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  • OKAMOTO Akira

Abstract

This paper examines an optimal rate of the national burden to establish guidelines for fiscal reform in Japan's graying society. The paper looks at Japanese tax and social security systems through an extended life-cycle general equilibrium simulation model. It explicitly considers the benefits that the government provides to households, which enables us to comprehensively evaluate the balance between benefits and burdens. Simulation results show that an optimal rate of the national burden is high when households put a great utility weight on the benefits coming from public services, and that it is low when the degree of publicness of government expenditure is high. The results also suggest that an optimal rate of the national burden would rise as Japan ages and may exceed 50% during the rapid aging of its population.

Suggested Citation

  • OKAMOTO Akira, 2006. "An Optimal Rate of the National Burden in an Aging Japan," Discussion papers 06036, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:06036
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    File URL: https://www.rieti.go.jp/jp/publications/dp/06e036.pdf
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    References listed on IDEAS

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    1. Okamoto, Akira, 2005. "Simulating progressive expenditure taxation in an aging Japan," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 309-325, April.
    2. Akira Okamoto, 2005. "Simulating fundamental tax reforms in an aging Japan," Economic Systems Research, Taylor & Francis Journals, vol. 17(2), pages 163-185.
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