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An Assessment of Abenomics: Evolution and Achievements
Author(s) -
Ito Takatoshi
Publication year - 2021
Publication title -
asian economic policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.58
H-Index - 20
eISSN - 1748-3131
pISSN - 1832-8105
DOI - 10.1111/aepr.12353
Subject(s) - economics , deflation , monetary policy , consolidation (business) , fiscal policy , arrow , monetary economics , stock (firearms) , inflation (cosmology) , keynesian economics , inflation targeting , macroeconomics , finance , mechanical engineering , physics , theoretical physics , computer science , programming language , engineering
This paper evaluates the first two arrows of Abenomics. The first arrow, aggressive monetary policy, was successful in lifting the Japanese economy out of deflation, although the 2% inflation target was not achieved. The real economy and financial markets recovered strongly. Unconventional monetary policy was successful through the channels of the yen and stock prices. The second arrow, “flexible” fiscal policy, can be interpreted as an enhanced counter‐cyclical policy, that is, to stimulate when needed, but tighten when possible. The first fiscal supplementary budget of February 2013 was a powerful boost to the economy. For fiscal consolidation, the consumption tax rate was hiked from 5% to 10% in two installments in April 2014 and October 2019. This helped to shrink the deficits. With strong macroeconomic performances, Shinzo Abe established a record as the longest‐serving prime minister in Japanese history.