The Fiscal Investment and Loan Program in Transition

This paper discusses the adequacy of the activities of the Fiscal Investment Loan Program (FILP) agencies after the fundamental reform in April 2001, which disconnected postal savings and public pension reserves from the FILP. It is found that many ideas of justifying the government interventions to the financial sector have now lost their relevancy. The activity of government financial intermediaries should be streamlined. Among infrastructure construction projects, the most serious part of welfare loss lies on national motorway construction, which is estimated to be about 14.5 trillion yen of welfare loss. J. Japan. Int. Econ., December 2002, 16(4), pp. 583–604. Department of Economics, Hitotsubashi University, Kunitachi, 186-8601, Japan; and TCER. © 2002 Elsevier Science (USA). Journal of Economic Literature Classification Numbers: H81, H54, R42.