Making Fiscal Policy in Japan: Economic Effects and Institutional Settings

Making Fiscal Policy in Japan is written for those who want to understand the role and performance of fiscal policy as an integral component of macroeconomic policy, and the attendant effects on economic growth. The case explored here is post-Second World War Japan, but the approach is one of international comparison. Ishi traces and analyses the central features of postwar Japanese fiscal policy and considers the institutional framework and policy objectives which shaped the budget process. The first part of the book provides a detailed overview of the topic, with detailed institutional and empirical information. In particular, the role that government played in Japan's postwar economic growth is explored in depth, with specific focus on the four sub-periods of occupation, rapid economic growth, internationalization, and the bubble economy. Part II explains the basic framework of budgets, the budgetary process in Japan, and fundamental strategies of fiscal authority. It looks in depth at the unique aspects of the balanced budget policy for 1953-65 and then at how financial resources for budgeting were automatically generated in a growing economy. The final part analyses specific policy issues in the public sector, among them human resource development, the ageing population and the social security system, tax incentives for export promotion, the Fiscal Investment and Loan Programme, and intergovernmental grant policy. Ishi argues that the Japanese government has been generally passive in guiding the state's economic activities, using fiscal policy to support the private economy rather than directly to influence the economy through deliberate expenditure and tax policies. The approach has been one of enhancing the market rather than of government intervention.

Table of Contents:
Part I. Overview: The Policy Environment 1: The Preconditions for Post-war Economic Growth 2: Rapid Economic Growth and Its Effects 3: Structural Changes Towards a New Dimension 4: The Emergence of the Bubble Economy and its Aftermath Part II. Fiscal Policy Responses 5: Budget and Budgetary Process 6: Budget Orthodoxy and Strategies of Fiscal Consolidation 7: An Empirical Analysis of Balanced Budget Policy, 1953-1965 8: How Financial Sources were Generated in a Growing Economy Part III. Specific Aspects of Budgetary Activity 9: Public Expenditure Trends in Light of Human Resource Development 10: Ageing and the Social Security System 11: Tax Policy for Export Promotion, 1953-1964 12: The Role of the Fiscal Investment and Loan Programme 13: The Budgetary Behaviour of Local Government and Intergovernmental Grant Policies

Review :
`Material in English on Japanese governmental polices on the nation's economy in general and fiscal policy in particular is scanty. ... Professor Ishi's book is a welcome commentary. ... The book's style is such that all those interested in the subject, whether in commerce or as amateur aficionados of international economies, will find easy access to the nub of the subject.' Raymond Lamont-Brown,