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- Publisher
- World Scientific Publishing Company
- Copyright
- Copyright ©
- ISSN
- 1793-9933
- eISSN
- 1793-9941
- DOI
- 10.1142/S1793993313500026
- Publisher site
- See Article on Publisher Site
Abstract
Despite the rise in public debt, Japanese Government Bond (JGB) yields have remained low and stable, supported by steady inflows from household and corporate sectors, high domestic ownership of JGBs, and safe-haven flows in light of ongoing European debt crisis. Nonetheless, the market capacity to absorb new government debt will likely decline over time as the population ages, posing risks for the JGB market. This paper examines the key risks of the JGB market, including a decline of private sector savings and potential spillovers from global financial distress, which could push up the government bond yields. A sharp rise in interest rate could pose challenges on public debt dynamics and financial stability in Japan. In that regard, more ambitious fiscal reforms to reduce public debt will help limit these risks.
Journal
Journal of International Commerce, Economics and Policy – World Scientific Publishing Company
Published: Feb 1, 2013
Keywords: Fiscal sustainability sovereign risk government yields financial distress