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On Financing Retirement, Health, and Long-term Care in Japan

Author

Listed:
  • Ellen R. McGrattan
  • Kazuaki Miyachi
  • Mr. Adrian Peralta

Abstract

Japan faces the problem of how to finance retirement, health, and long-term care expenditures as the population ages. This paper analyzes the impact of policy options intended to address this problem by employing a dynamic general equilibrium overlapping generations model, specifically parameterized to match both the macroeconomic and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers a better macroeconomic performance and higher welfare for most individuals than other financing options, including those of raising social security contributions, debt financing, and a uniform increase in health and long-term care copayments.

Suggested Citation

  • Ellen R. McGrattan & Kazuaki Miyachi & Mr. Adrian Peralta, 2018. "On Financing Retirement, Health, and Long-term Care in Japan," IMF Working Papers 2018/249, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/249
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    References listed on IDEAS

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    Cited by:

    1. Mariana Colacelli & Emilio Fernández Corugedo, 2018. "Macroeconomic Effects of Japan’s Demographics: Can Structural Reforms Reverse Them?," IMF Working Papers 2018/248, International Monetary Fund.
    2. Reona Hagiwara, 2022. "Welfare Effects of Health Insurance Reform: The Role of Elastic Medical Demand," IMES Discussion Paper Series 22-E-05, Institute for Monetary and Economic Studies, Bank of Japan.

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