Takeo Hoshi Co-Authors Financial Times Article on Japan's Economy
Only tough reforms can save the land of the rising debt
01/20/2011
Takeo Hoshi and Anil Kashyap,
Financial Times
Attention to the risk of default on sovereign bonds has been largely confined to European countries. Yet the problems Japan faces merit as much scrutiny. On Tuesday Kaoru Yosano, the new minister for economic and fiscal policy, warned that his country’s “fiscal status is at a critical point”. Yet this follows a 20-year government spending binge that has moved its debt position from about the best of developed countries to about the worst, and which now needs urgent action.
The Organisation for Economic Co-operation and Development now puts Japanese government net debt at 114 per cent of gross domestic product. This compares with only 97 and 62 per cent for Greece and Ireland, and only 68 per cent in the US. Worse still. Tax revenue last year covered less than half of spending, so the situation is rapidly deteriorating. Now Japan can adjust taxes and spending to fix its fiscal position. Alternatively, it can default, or try to inflate its debt away.
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Takeo Hoshi can provide commentary on Japan's financial system, bank regulation, macroeconomic conditions and macroeconomic policy.
Takeo Hoshi and Anil Kashyap co-authored the report "Why Did Japan Stop Growing?" on Dec 29, 2010 as commissioned by the National Institute for Research Advancement.
