On February 24, the Second Subgroup (subgroup leader: Professor Toshihiro Ihori, Graduate School of Economics, University of Tokyo) of the Study Group on the Financial System (established by JBA and headed by Professor Keimei Kaizuka, Professor Emeritus at the University of Tokyo and Director of the Center for Advanced Research in Finance) compiled recommendations regarding the relationship between economic measures and fiscal discipline, as well as their roles.
The Study Group conducted research on the effects of past economic measures and increases in fiscal spending conducted in Japan, their relationship to balancing the national budget, as well as the best balance between the two.
Based on the research and from the perspective of achieving fiscal soundness in the medium- to long-term, the Group recommends that the government establish a goal for fiscal management at an early stage and that it sort out and define the relationship between medium- to long-term fiscal targets, such as by creating an elastic clause to serve as a rule for economic measures that are implemented during extreme recessions. Furthermore, with regard to annual expenditures, it is requesting the national government and prefectural and municipal governments alike to manage and reduce expenditures after having created budget formulation rules. As for annual revenue, it is requesting the government to start full-fledged discussions immediately on conducting fundamental reform of annual revenue, including not only taxes but also social insurance premiums.