To date, there have been investigations in theory and in empirics in Japan on the sustainability of such problems as accumulated government deficits, public pension system in face of the declining birthrate and rapidly aging population, and speculative bubbles of land and stock prices, from rather negative, pessimistic viewpoints. In addition to these, rising concerns are directed toward the coexistence of economic development and sustaining natural environment as envisaged by endangered crises of diminishing biodiversity, drier and expanding deserts, global warming and sea surface elevation, and so on.

　It was the sustainable development goals or SDGs, which all the members of the United Nations (then 193 countries) unanimously adopted in 2015 in foreseeing the target year 2030, that have clarified what ought to be the desired future state of world and stimulated preferentially worldwide, global strategic actions to pursue the sustainable economic and social development as individually familiar issues. Then as extensions or applications of SDGs, quite new sustainable goals such that the sustainable local economy, sustainable firm management, sustainable neighborhood relations and the like have arisen and been occasionally referred to even over people’s daily conversations.

　Looking around the globalized international economies, many national economies nowadays confront simultaneously with common difficulties of global warming, acid rains, marine plastic pollution, and so on which basically were drastically worsened by the economic development of once underdeveloped national economies, although these global environmental issues were incipiently generated and accumulated through earlier development of now industrialized economies. The new coronavirus (COVID-19) pandemic that had spread, registering several waves, globally through 2020-23 brought about in a short time large recessions in a number of national economies that were comparable with the United States Great Depression of the 1930s, or in some nations worse than USGD statistics. This pandemic experience newly reminds us of the fact that national economies are interrelated and simultaneously face common crises and cooperate against such crises, which leads us to the awareness that global interconnectedness and co-movement indicates that the sustainability of individual national economies should also ask as a whole the sustainability of the global economy.

　I organized, as an editor in The Financial Review No. 150 published in Japanese in 2023, a special issue on the sustainability of selective macroeconomic problems. The following papers in this issue, papers in this Public Policy Review (PPR), reorganize compactly the original contributions. My introductory paper, Asako (2023), overviews four macroeconomic problems whose sustainability is questioned and examines their mutual interconnections. More concretely, as those relevant to the national economies, we investigate both theoretically and empirically accumulated government deficits, the public pension system as a going concern, booms and busts of speculative bubbles of land and stock prices, and as those relevant to the global economy that is beyond national economies the convergence to some sustainable steady state under environmental external diseconomy.

　This paper reviews previous studies on fiscal sustainability and conducts a pilot empirical analysis for Japan. In Section I, we summarize the definition of fiscal sustainability and the argument over sovereign defaults. Section II outlines the transversality condition as a typical formulation of fiscal sustainability. Section III introduces money and examines the transversality condition of nominal values. In this setting, the fiscal theory of the price level (FTPL), which asserts that the transversality condition is satisfied by price fluctuations, becomes valid. Section IV discusses three issues, taking into account the comparison of interest rates and economic growth rates (i.e., the Domar condition). First, based on the Domar condition, we discuss the equivalence/non-equivalence between the transversality condition and the convergence of the government debt-to-GDP ratio. Second, we consider the Domar condition from the perspective of dynamic efficiency and its implications for fiscal sustainability. In particular, we suggest that in the case where ɡ > r, a rational bubble can arise in government debt and that convergence of the government debt-to-GDP ratio below a certain value (rather than the transversality condition) is an appropriate sustainability indicator. Third, we conduct an empirical analysis (stochastic debt sustainability analysis: SDSA) when there is uncertainty in r − ɡ. According to our calculations, when there is uncertainty in r − ɡ, even if the current situation is ɡ > r, Japan’s government debt-to-GDP ratio could be very large in 2030.

　In Japan, where the population is aging and the birthrate is declining, the pension replacement rate of public pension system is scheduled to be reduced by “macroeconomic slide.” Thus the role of the private pension system increases, and the sustainability of the private pension system itself becomes more important. Although defined contribution (DC) plans, a kind of private pension, have been steadily spreading since their introduction in 2001, they still have issues that need to be addressed. The DC contribution limit should be fundamentally revised in a way that allows individuals to enjoy equal opportunities to contribute regardless of their work style or workplace pension system. From the perspective of tax theory and finance, the transition of the private pension tax system to the “EET type” is also an important issue. In addition, it is important that more individuals participate in the DC plan and make effective use of it. Drastic measures such as an automatic enrollment system may be worth considering for further expansion. Moreover, it should be kept in mind that the management and administration of the DC plan are carried out by private sector companies and thus they must be sustainable as a business.

　This paper discusses the latest research trends on the asset price bubble. I discuss possible reasons why policymakers and researchers have differing opinions on the subject. I discuss a famous policy controversy, as well as the recurrent-bubble model that my collaborators and I have developed. This paper also discusses its policy implications.

　This paper makes a distinction between the analytical viewpoints of sustainable growth and sustainable development, which are derived from the concept of sustainability, and conducts a detailed review of the two major research papers that represent the milestones of research on environmental macroeconomics in recent years. Here, the analysis focuses on the point that the research itself introduces an endogenously determined time preference function with a relatively long history, into the dynamic framework of environmental macroeconomics. Research on macroeconomic dynamics has pointed out the importance of so-called “deep parameters.” The rate of time preference is one of such parameters, and we can say that it has also continued to influence macro-theoretical research in environmental economics. The first model examines the impact of environmental taxes under endogenous time preference, in the context of sustainable growth being achieved. Next, the second model derives the dynamic features of the model when complex endogenous time preferences are considered, based on definitions that are rooted in the concept of sustainable development as the constancy of utility over time.