This paper investigates Japanese fiscal policy since 1950s from the viewpoint of merits and costs of public investment. Section 1 briefly summarizes the post-war fiscal policy in Japan and evaluates how Keynesian fiscal policy has been effectively employed. Section 2 investigates the future benefits of public consumption and public investment. Finally, section 3 discusses the sustainability of government deficit and analyzes the political-economic aspect of fiscal reconstruction which aims to reduce spending on public works.
