Fiscal consolidation in Japan could boost long-term growth, despite short-term costs.
The article examines how Japan's high public debt has led to a need for fiscal consolidation and structural reforms. By using a model, the researchers found that while fiscal consolidation may have short-term costs, it could bring significant long-term benefits. Implementing reforms to boost potential growth could help support fiscal consolidation. The study emphasizes that domestic policies should take precedence over external factors in achieving these goals.