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Forests play a crucial role in mitigating climate change and reducing emissions as a major carbon sink. However, its value in removing carbon dioxide (CO2) from the atmosphere is always underestimated in natural capital (NC) accounting and sustainability assessments. This study predicted Japan's forest CO2 removal by afforestation and forest management and its monetary value until 2042 from national to gridded level, with statistical data and complementary satellite data products, and explored how that CO2 removal will contribute to sustainable development under the inclusive wealth (IW) framework. The results show that: (1) the annual CO2 removal by forests has the potential to offset 15.3% of the emission and increase NC by 6.8% in Japan, significantly contributing to carbon neutrality and IW growth; (2) the total CO2 removal in exiting forests will peak at around 2030 and then decrease, but expanding afforestation could offset that decrease in later years; (3) the spatial distribution patterns of IW and forest CO2 removal are opposite. This indicates a national carbon trading market could create new wealth for rural communities where vast forests exist, and then effectively balance the inequal urban–rural development in Japan. The explicit spatial information of this study could provide valuable information for differentiating policy priorities of forestry planning and sustainable development in different local communities. [ABSTRACT FROM AUTHOR]

In this study, we explore the interaction between fiscal and monetary policies in Japan over a period including the Global Financial Crisis (GFC) and a phase of the Covid-19 pandemic under the presupposition that policy regimes are fixed and there are random switches between the two regimes. Using the Regime switching model, the results show that fiscal policy is more active in Japan than monetary policy, especially during the GFC and the Covid-19 pandemic. By using the Bayesian VAR model, we continue to further analyze the response of macroeconomic factors to an expansionary fiscal policy to verify the above findings once again. The results indicate that government expenditure helps boost the economy in the short-run. The positive impact of a government expenditure shock on GDP, PPI, and Investment lasts about three to four quarters, while private consumption only increases in one next quarter. These positive responses can increase the inflation rate and make the local currency overvalued, reflected in the increase in the effective exchange rate. A fiscal policy shock does not have much impact on the monetary policy, specifically, the money supply and interest rates of long-term government bonds still tended to decrease as expected by Japan. This is the basis for studying policy implications for some countries pursuing similar policies to Japan. [ABSTRACT FROM AUTHOR]