In late December 2014, Shinzo Abe was elected to another term as the prime minister of Japan. His re-election was largely interpreted as a vote of confidence for his economics policies, collectively referred to as "Abenomics." Comprised of three "arrows," including expansionary monetary policy, fiscal stimulus, and structural reform, these strategies were designed to reverse Japan's two-decade long challenge with deflation and sluggish growth. Japan also faced several worrisome structural issues, including a demographic crisis, strict labor regulations, and low wage growth, despite low unemployment, in addition to a debt balance that reached 240% of GDP. As the Abe government launched a second round of quantitative easing, totaling ¥80 trillion per year, many wondered, would Abe's three arrows be enough to reverse Japan's problems with economic growth, rising debt, and persistent deflation?
Keywords: Japan; currency; bonds; government bonds; Government Debt; public finance; economics; quantitative easing; stimulus; fiscal policy; fiscal deficits; debt management; Debt reduction; Abenomics; exchange rate; macroeconomics; Asia; Exports; reform; Economics; Macroeconomics; Policy; Government Legislation; Government and Politics; Asia; Japan;
Citation:
Alfaro, Laura, and Hilary White. "Japan's Missing Arrow?" Harvard Business School Case 715-050, April 2015. (Revised January 2020.) View Details