Doi, Ihori, and Mitsui analyze sustainability issues with Japan's fiscal policy and then discuss the debt management policy based on the maturity structure of government bonds.

• Position: Conferences

Doi, Ihori, and Mitsui analyze sustainability issues with Japan's fiscal policy and then discuss the debt management policy based on the maturity structure of government bonds. They also investigate the coordination between fiscal and monetary authorities in the direction of fiscal reconstruction. Partial default by the fiscal authority is not effective in the long run, because the gross rate of return on debt adjusts to offset changes in the size of default. Inflationary taxes levied by the central bank will not have such an offsetting effect. Thus, the emergency reform by the monetary authority may well be better than the emergency reform by the fiscal authority as a way to avoid bankruptcy. Given the present maturity structure of bonds...