Description

The note will make the case for a substantial increase in the VAT in Japan as a core measure of fiscal consolidation, assess its macroeconomic impact (on real activity and inflationary expectations), consider key elements in its design and implementation (dealing with the distributional consequences; ‘big-bang’ versus preannounced step increases); the importance of retaining a single rate and adopting compensating spending measures as needed) and a range of related issues (such as the pros and (likely even larger) cons of earmarking).

Taxonomy

Economic policy , Social policy , Social security

More publications in this series: Staff Discussion Notes

More publications by: Kenneth Kang ; Michael Keen ; Mahmood Pradhan ; Ruud A de Mooij