Research On Financial Sustainability Of Japan

After World WarⅡ, the Japanese government debt policy has become an essential policy tool to stimulate economic development, especially since the economic bubble burst in 1992. In order to stimulate economic growth, the Japanese government pursued Keynesian policy, through issuance of treasury bonds to stimulate the growth. This article analyses Japanese government bonds from the aspect of credit risk and concludes whether foreign currency reserve assets of the investment in China should hold in Japanese government bonds and the duration of it. The analysis has two main parts. First relative index method is used in Japan's national debt scale analysis; The second part is the financial sustainability of the empirical analysis of Japan after World WarⅡ.This paper uses the debt burden ratio, debt dependence and other indicators to measure the relative size of Japanese government bonds, and found that Japanese government bonds are too large. However, due to the special structure of Japanese government bonds, the outbreak of sovereign debt crisis which has yet happened to Greece did not happen to Japan.The measurement mainly based on the analysis to find whether fiscal revenue and expenditure have the cointegration and cointegration coefficient size. And the test results show that after World WarⅡ, the finance f Japan is significantly not sustainable, indicating that if the current financial situation goes on in Japan, the Japanese financial crisis will occur in future, then the holder of Japanese government bonds would face the risk of default or delinquency.For yen exchange rate goes strong currently, China's foreign exchange reserves may hold short-term Japanese government bonds in order to obtain the exchange gain. However, the credit risk of long-term Japanese government bond is too large, while the yield if far below the bond yields of United States, Britain, Germany and other countries. So the proportion of long-term Japanese government bonds in the basket of foreign exchange reserves should be reduced.