Particular emphasis is placed upon developing tools which can be used both theoretically and empirically to clarify essential economic concerns in Japan's public sector. These include the macroeconomic incidence of fiscal decentralization, dependence on government bonds for covering fiscal deficits, and social security reform. In analyzing Japan's underperforming public sector, the authors develop and recommend policy solutions aimed at achieving Japan's growth potential, improving the quality of the public sector, and strengthening the sector's contribution to the Japanese economy. Guiding the reader toward an overall understanding of public-sector reforms, decentralization and fiscal policy in Japan, this book will strongly appeal to academics, students and researchers with an interest in modern public finance theory and macroeconomic analysis.