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This paper reviews the literature on the sustainability of Japanese government debt/deficit. First, we offer an overview of the approaches and the key findings on the sustainability analysis. Second, we introduce the arguments of Hoshi and Ito [1], which they predict that foreign investors' share of JGBs could exceed beyond domestic ownership. Finally, we discuss the coordination problem in the JGB market based on the findings of Onji et al. [2] that examine how government withdrawal from the JGBs could roil the market.

Abstract
While the asymmetric treatment of positive and negative income creates clear tax incentives to shift income among a group of closely related corporations, attempts to document the impact of such behavior on economic outcomes are relatively sparse. We aim to provide evidence on tax-motivated transfers from a large dataset of Japanese corporate groups. Using company level data on 33,340 subsidiary time pairs from 1988, 1990, and 1992, we consider testable implications of income shifting in a theoretical model tailored to the Japanese institution of the early 1990s and empirically examine the spread of the profitability distribution, the attrition rate of loss-making subsidiaries, and the propensity to report zero profit. The findings suggest that income shifting was pervasive when Japan had not adopted a formal allowance for group-level tax. The result underscores the importance of accounting for the inter-relatedness of companies, in designing a corporate income tax.

How do changes to taxation policy affect the organizational choices of firms? Using historical firm data constructed from Japanese corporate genealogies, we examine the short-run impact of introducing a personal income tax (PIT) in 1887 on tax-motivated incorporation. Between 1880 and 1892, we find that the introduction of PIT increased the share of incorporated firms by more than 3 percentage points, indicating firms chose their organizational structure to avoid new taxation. Furthermore, our results suggest that a corporate income tax may have acted as a backstop to maintain revenue collected through PIT.

Abstract
Divergent interests of bank managers and financial regulators potentially compromise the efficacy of bank rescue operations. This study empirically investigates the agency problem encountered in a capital injection program implemented in Japan. We hypothesize that the operations requirement to reduce workforce lead banks to overstate the extent of downsizing by reassigning older workers to bank subsidiaries. We implement a difference-in-differences analysis using a panel of Japanese banks from 1990 to 2010. We also employ propensity score matching to control for sample selection bias. The result shows that injected banks exhibit workforce rejuvenation relative to non-injected banks. Among injected banks, the average employee age falls by approximately 1 year, which is equivalent to a reduction of approximately seventy 65-year-old workers. On an unconsolidated basis, the number of employees in injected banks decreases as a response to the injection. However, on a consolidated basis, which accounts for subsidiary employment, the number of employees does not decrease. Our finding suggests that the Japanese practice of lifetime employment (LTE) survived, albeit in a limited form, among restructured banks.

The Japanese government is heavily indebted but the yield on the Japanese government bond (JBG) remains low to date. We hypothesize that the presence of the Japanese government as a large stable investor of JGBs exerted a stabilizing influence on private

The Japanese government is heavily indebted but the yield on the Japanese government bond (JBG) remains low to date. We hypothesize that the presence of the Japanese government as a large stable investor of JGBs exerted a stabilizing influence on private