The Policy Research Institute is engaged in fundamental and comprehensive research and studies on domestic and international issues in fiscal and economic fields, including policy matters, as think-tank of the Ministry of Finance.
At present, Japan's finances are in a quite difficult situation, with a third of the annual expenditure being dependent on public debt, and the amount of public debt acccumlated twice as much as GDP. The population aging in Japan is expected to progress fastest among industrial countries, and it is necessary to secure as much funding as possible to maintain the current social security system.
The PRI conducts policy simulations through model analyses and thereby contributes to realizing policies that can balance the maintenance of the social insurance system and fiscal consolidation efforts.
In order to simultaneously achieve fiscal consolidation and secure stable funds for maintaining the social security system, the government of Japan has been carrying out tax system reform centered on the increase of consumption tax rates. The government is raising consumption tax rates from the viewpoint of securing stable funds through having social-security burdens be evenly borne among all people instead of handing them down to the following generations. In the meantime, giving consideration to low-income earners and implementing measures to prevent downturns in personal consumption and corporate capital investment are also required.
The PRI is conducting empirical analyses of past tax revisions with the aim of achieving reform covering the tax system as a whole
The Japanese economy faces problems such as changes in industrial structures in response to the declining birthrate and population aging and rapid technological innovation. Recently, the sluggishness in Japanese companies' fund surplus and capital investment has been pointed out and how to prevent industrial hollowing-out is a big issue.
The PRI has conducted economic analyses using economic models for policy formulation by the Ministry of Finance (MOF) and has estimated influences, etc. of macroeconomic policies.
Economic stability in Asia, a region with which Japan has close economic links, is also a significant issue for Japan and the MOF has been promoting financial cooperation within the region. The PRI has been conducting research and analyses of Asian countries' economies and financial markets with the aim of creating a framework for more extensive regional cooperation in the fields of finance and economy
As trades of goods and services are increasingly expanding, it has become necessary to make analyses in consideration of changes in employment and enhancement in producing technology being brought about by economic development in the Asian region. The PRI is also analyzing Japan's import and export structures from the viewpoint of the global value chain in order to enhance and maintain Japan's international competitiveness and expand the current account surplus.