Sustainability of public debt: Evidence from Japan before the Second World War

Masato Shizume*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)


Japan defaulted on its public debt after the Second World War. This article addresses the question of how Japan lost its ability to sustain its public debt. We explore the sustainability of public debt in Japan before the War. We conduct statistical tests for the relationship between public debt and primary fiscal balance, and find that Japanese public debt was sustainable until 1931, and unsustainable in and after 1932. Narrative modes of analysis indicate that Japan lost its fiscal discipline because of the military's effective veto over budgetary processes and because of the absence of pressure for sound fiscal policy from international financial markets.

Original languageEnglish
Pages (from-to)1113-1143
Number of pages31
JournalEconomic History Review
Issue number4
Publication statusPublished - 2011 Nov
Externally publishedYes

ASJC Scopus subject areas

  • History
  • Economics and Econometrics


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