This paper examines fiscal sustainability conditions in the Japanese economy estimating a Markov-switching vector autoregressive (VAR) model. Three fiscal sustainability conditions are identified in one VAR model: the stance of government, Domar (1944)-type GDP growth, and other factors. The...

The Japanese government has amassed a huge amount of gross public debts over the past several decades. However, previous empirical works dealing with vector auto-regression (VAR) have not considered the effect of debt on fiscal policy and the macro economy. In this paper, we incorporate debt...

This paper empirically investigates the changing dynamics of fiscal policy shocks to the macroeconomy in Japan. By estimating a Markov-switching vector-autoregressive (VAR) model, regime switches in both automatic fiscal responses to output and discretionary fiscal shocks are investigated. The...