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Economic Analysis of Fiscal Measures for Reconstructing the Tohoku Region After the Great East Japan Earthquake: Using a Dynamic Two-Regional CGE Model

  • Mitsuru OkiyamaEmail author
  • Suminori Tokunaga
Chapter
Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER, volume 11)

Abstract

This chapter measures the economic impact of the reconstruction budget and illustrates the transition of the regional economies in the disaster-affected region amid a declining population using a recursive dynamic regional CGE model. Our findings are as follows: Firstly, even if the Great East Japan Earthquake had not occurred, the disaster-affected region would have experienced weaker growth in its sub-regional economies owing to the impact of a declining population. Secondly, the fiscal measures in the intensive reconstruction period contribute toward recovering the real Gross Regional Product (GRP) of the disaster-affected region, which slumped following the Great East Japan Earthquake. But, the real GRP of the disaster-affected region begins to move downward after 2018. However, the fiscal measures would slow down the pace of curtailment of the regional economies in the disaster-affected region compared with the scenario without fiscal measures. Third, it is advisable that the government should provide fiscal measures to the disaster-affected region after the intensive reconstruction period by adopting a different form of reconstruction budget, that is, by revising the distribution ratios of the local allocation tax grants. However, this measure alone would not allow the regional economy in the disaster-affected region to recover and exceed the level prior to the earthquake. In order to realize sustained economic growth, it is necessary to take other measures after the intensive reconstruction period, such as productivity improvements in each industry located within the disaster-affected region, using fiscal transfers.

Keywords

Great East Japan Earthquake Disaster-affected region Fiscal measures Intensive reconstruction period Recursive dynamic regional CGE model 

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Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.Reitaku Institute of Political Economics and Social StudiesKashiwa, ChibaJapan
  2. 2.Faculty of Economics and Business AdministrationReitaku UniversityChibaJapan
  3. 3.University of TsukubaTsukubaJapan

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