A fiscal stimulus, fiscal consolidation or a rising tide: those were the choices in the recent election to be head of Japan’s ruling Liberal Democratic Party. The triumph of a “stimulate now, balance the budget later” policy in the form of Taro Aso – now prime minister – shows that other priorities must compete with Japan’s vast government debt.
Repeated attempts in the 1990s to jump-start the economy with public spending, plus the corrosive fiscal effects of an aging population, mean Japan’s gross public debt is 171 per cent of gross domestic product.
