Debt and Economic Growth: The Case of Japan

Abstract

This article empirically examines whether or not public debt has an effect on economic growth in Japan. Public debt is becoming a concern all over the world. It is no longer a problem of developing countries but is becoming a serious problem for developed countries as well. In Japan, large accumulation of debtis now receiving much attention. This article focuses on the Japanese case of the relationship between public debt and growth. The results show indicate a negative relationship between public debt and economic growth in Japan, as in many existing studies. Moreover, openness of the economy is not related to economic growth. Debt should be avoided or the quantity should be reduced in future. Reduction of dependence on exportsand efforts to cut the debt is necessary to expand Japan'seconomy.