"The end game in Japan is really unclear -- their population is declining, they don't have an obvious way to replenish their workforce," Rogoff, currently an economist professor at Harvard University, told CNBC Thursday.
"(People) are retiring and they want their money back. Pension funds are becoming net savers, where are they going to get more money?"
At 200 percent of its national gross domestic product, Japan's public debt is the highest among industrialized countries. And the IMF has warned that the debt could reach 250 percent of its GDP by 2015, if the government does not take serious measures to reduce it.
Japan's situation shows emerging Asia cannot be "too dependent on debt as it is a very risky strategy", said Rogoff, and that it is vital for the region to develop more sophisticated equity markets and attract more venture capital.
On whether the U.S. economy is facing a double-dip recession, Rogoff said it's unlikely at this point, as the financial crisis, while deep, is a "plain vanilla, garden variety" downturn.
"The bad news is that that is a lot of bad news, but the good news is, it is the end."
On the subject on Europe’s bank stress tests, Rogoff believes the conditions laid out are not tough enough.
"Putting in the crisis scenario of a 17 percent write-down of the Greek debt and 3 percent on the Spanish…that's pretty modest," said Rogoff.
He added that if banks fail the tests, European governments could use the opportunity to bully banks to recapitalize or be nationalized.
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- Rogoff: Good That Things in US Are This Bad
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