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Working Paper 98-5
Tables and Figures

Local Government Spending: Solving the Mystery
of Japanese Fiscal Packages

© Institute for International Economics.

 

Table 1: Economic Stimulus Packages, 1992-96 (billion yen)
  3/31/92 8/28/92 4/13/93 9/19/93 2/8/94 4/14/95 9/20/95 FY92 FY93 FY94 FY95 Total
  a b c d e f g (=a+b) (=c+d) (=e) (=f+g) (cumulative)
 
Total 390 10,800 13,300 6,250 15,300 4,800 14,224 11,190 19,550 15,300 19,024 65,064
Public works 390 5,500 6,600 1,300 5,900 2,700 8,545 5,890 7,900 5,900 11,245 30,935
Local soloa 0 1,800 2,300 500 300 0 1,000 1,800 2,800 300 1,000 5,900
Tax cutb 0 0 200 100 5,900 0 0 0 300 5,900 5,900 12,100
Central na na na na na na na 0 300 3,840 3,840 7,980
Local na na na na na na na 0 0 2,060 2,060 4,120
Otherc 0 5,300 6,500 4,850 3,500 2,100 5,679 5,300 11,350 3,500 1,879 27,929

Note: Public works includes general public works, new social infrastructure maintenance, public building maintenance, and purchase of land for future public works.

a. Local solo represents public works conducted solely by local governments.
b. The tax cut cannot be separated into central and local for each package because of lack of data. Moreover, the numbers for fiscal years show the cumulative effect and do not necessarily match the sum of each package because they depend on when the tax cut was effective.
c. Other includes private investment initiatives such as increases in loans to medium and small firms and housing loans.

Source: Nikkei Shinbun (various issues); Economic Indicators (various issues), Dai-ichi Life Research Institute.

Table 2: Actual Impact of Stimulus Packages on Central and Local Government Budget, 1992-96 (billion yen)
  Actual public expenditure caused by fiscal stimulusa Changes in tax revenue caused by fiscal stimulus
 
      Local          
     
         
        Types of construction            
       
           
  Total Centralb Total Solo Joint Supportc Disaster Total Central Local Tax grantse Impact from changes in tax coded (central government only)
 
FY1992 5,218 511 4,707 2,268 1,582 254 603 -6,100 -2,796 -3,585 282 -575
FY1993 8,157 3,516 4,640 1,297 2,261 357 726 -4,591 -791 -4,142 342 -560
FY1994 3,308 2,377 930 -1,521 1,665 101 686 -8,346 -4,123 -4,367 144 -4,895
FY1995 3,146 1,380 1,766 -2,396 2,714 433 1,015 -5,954 -3,541 -2,588 176 -4,986
FY1996 690 1,042 -352 -3,362 2,032 172 807 -8,753 -6,252 -2,643 142 -6,583
Cumulative 20,518 8,827 11,691 -3,714 10,254 1,315 3,836 -33,743 -17,503 -17,326 1,085 -17,599

a. Actual public expenditure caused by fiscal stimulus was the difference between actual expenditure and the initial budget.
b. Central government figures exclude subsidies to local government.
c. Support is the local government's share of public works conducted solely by the central government.
d. Figures indicate changes in tax revenue due to changes in tax code and are estimated by the Ministry of Finance and presented in the Monthly Economic Statistics.
e. Tax grants include both conditional and unconditional tax grants from the central to local governments.

Source: Japan Ministry of Finance (1997); Japan Ministry of Home Affairs (1998).

 

Table 3: Quality of Public Investment: Regression for Private Capital Productivity
R2 = 0.986
Adjusted R2 = 0.985
F(2, 24) = 860.25
Number of observations = 27
Dependent variable: Private capital productivitya
Independent variable Coefficient t-value
Labor forceb 0.534 38.728
Public capital stockc 0.113 0.859
Constant 4.568 22.076

a. Private capital productivity is measured by nominal GDP divided by private capital stock. Using the natural log transformation, it is expressed as ln(GDP) - ln(private capital stock).
b. Labor force is measured by the number of workers normalized by private capital stock. Using the natural log transformation, it is expressed as ln(labor) - ln(private capital stock).
c. Public capital stock is measured by public capital stock normalized by private capital stock. Using the natural log transformation, it is expressed as ln(public capital stock) - ln(private capital stock).

Sources: Ministry of Finance Statistics Monthly (various issues), Ministry of Finance; Japan Annual Statistics (Nihon Tokei Nenpou) (various years), Ministry of Coordination and Arrangement.

 

Figure 1: Fiscal Connection Between Central and Local

Figure 2: Public Works by Type

Note: Local solo: public works solely conducted and financed by local government. Joint: public works mainly conducted by local governments and jointly financed by local and central governments. Central solo: public works solely conducted by the central government, but paid for partly by local governments.

Source: Ministry of Home Affairs (1998).