Economics & Finance / Macroeconomics / Fiscal Policy & Government Spending

Why Japan's $12 Trillion Debt Hasn't Destroyed Its Economy (Yet)

Charles Y. Horioka, Takaaki Nomoto, Akiko Terada-Hagiwara

Japan's debt-to-GDP ratio is over 200%, the highest in the developed world. So why hasn't it triggered a financial crisis? This video breaks down the shocking data from a 2013 NBER paper by Charles Y. Horioka, Takaaki Nomoto, and Akiko Terada-Hagiwara. We reveal how Japan's massive domestic savings, strong home bias, and a temporary 'safe haven' effect from foreign investors after the 2008 crisis kept the system afloat. But here's the twist: those pillars are crumbling. Aging population, shrinking savings, and fickle foreign investors could flip the script. Watch to understand the real risk lurking behind Japan's debt miracle—and what it means for the global economy.