Technical Report Public Education, Pension and Debt Policy

Yasuoka, Masaya  ,  Oguro, Kazumasa

2015-07 , Institute of Economic Research, Hitotsubashi University
Our paper sets the model with public education investment, pension bene t and public debt stock and examines how tax burden and expenditure share between education policy and pension policy a ect the public debt stock ratio to Gross Domestic Product (GDP). Moreover, our paper considers the target policy to be constant public debt ratio to GDP over time. Based on Domar condition, our paper examines scal sustainability and how tax and expenditure policy a ect on the public debt stock ratio to GDP in the long run. The change of expenditure share between public education investment and pension bene t can decrease the public debt ratio to GDP. Moreover, our paper derives two positive income tax rate to hold constant public debt ratio to GDP. Thanks to low tax rate, physical capital accumulation increases and then both income growth and income level increase.

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