Annual Report on Japan' s

Economy and Public Finance


- No Gains Without Reforms -

December 2001

Cabinet Office

Government of Japan

[Annual List]


Annual Report on Japan's Economy and Public Finance 2000-2001


Chapter 1 Preconditions to Strong Recovery of the Economy

   Section 1 From Short Recovery to Another Recession

      1 Reasons for Weak Economic Recovery

      2 Recovery of Business Investment was Weak

      3 Sluggish Consumption

   Section 2 Advancing Deflation and Monetary Policy

      1 Present State of Deflation and its Background

      2 Monetary Policy under Deflationary Economy

   Section 3 Direction of the Economy

      1 Supply-side Weakness

      2 Future Demand Trends

      3 Future Price Movement

Chapter 2 Problem of Non-Performing Loans and Strength of the Japanese Economy

   Section 1 Swelling non-performing loans

      1 Three Characteristics of the Problem of Non-Performing Loans

      2 Background of Prolonged Problem of Non-Performing Loans

   Section 2 The problems of non-performing loans and excessive debts: Burdens on the Japanese economy

      1 Disintermediation of Bank-System Lending Caused by the Erosion of Banks' Profitability

      2 Economic resources, such as labor and capital, are stagnating in fields of low productivity

      3 Corporations and Consumers Have Become Cautious Due to a Decline in Confidence in the Financial System

      4 Adverse Impacts of Excessive Debts of Corporations

   Section 3 Structural Reform Raises Growth Rate

      1 Decline in Potential Growth Rate

      2 Raising Potential Growth Rate by Promoting Structural Reforms

Chapter 3 Overall Assessment of Japan' s Public Finance

   Section 1 Expanding Budget Deficits

      1 State of Japan' s Budget Deficits

      2 Structural Deficit Level and Sustainability of Budget Deficits

      3 Prefecture-by-Prefecture Breakdown of Budget Outlays and Tax Contributions

   Section 2 Public Finance as Seen from Stock Data of Assets and Liabilities

      1 Balance Sheet for Public Sector

      2 Developing Stock Data of Assets and Liabilities

      3 Japan' s Public Finance as Seen from Stock Data

      4 Income capitalization method-based Estimation of Road and Airport Development Projects

   Section 3 Public Finance as Seen from Lifetime Benefits and Contributions

      1 Benefits and Contributions for Each Generation

      2 Benefit-Contribution Relationship for Present Generations

      3 Additional Contributions for Future Generations

   Section 4 Local Finance Problems

      1 Local Fiscal Conditions Growing Tougher

      2 Problems with Local Revenue Bases

      3 Local Administrative and Fiscal Reform Efforts


Appended Notes

Long-term Economic Statistics

[Annual List]