GENERATIONAL DISTRIBUTION OF FISCAL BURDENS: A POSITIVE ANALYSIS

This is the peer reviewed version of the following article: Uchida Yuki, Ono Tetsuo. GENERATIONAL DISTRIBUTION OF FISCAL BURDENS: A POSITIVE ANALYSIS. International Economic Review, iere.12654 (2023), which has been published in final form at https://doi.org/10.1111/iere.12654. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
This study presents an overlapping generations model to analyze the impact of population aging on fiscal policy and intergenerational fiscal burden. Aging populations incentivize governments to increase capital and labor income tax rates and the public debt-to-GDP ratio, consistent with OECD evidence. Our model-based simulation for Japan and the United States (2000-2070) reveals that Japan will experience higher labor income tax rates, a greater public debt-to-GDP ratio, and a lower government expenditure-to-GDP ratio compared to the United States. From 2040 onwards, Japan is predicted to surpass the United States in terms of the capital taxrate.