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Retiring Abenomics

Sep 7, 2020 Daniel Gros

Outgoing Japanese Prime Minister Shinzo Abe's highly publicized economic-policy program was supposed to rescue Japan from years of disappointing growth, below-target inflation, and rising debt. But, in the end, the most that can be said for it is that it has offered a cautionary tale for other aging rich countries.

BERLIN – The official reason given for Shinzo Abe’s departure as Japan’s longest-serving prime minister was personal health. And now, his signature economic-policy program may be headed for a similar fate.

“Abenomics” was ushered in with great fanfare in 2013, so it is worth considering what it has accomplished over the past seven years. The official version on the Japanese government’s website has always featured three “policy arrows” targeted at aggressive monetary policy, flexible fiscal policy, and growth strategy, including structural reform.

Of these, monetary policy was clearly the biggest focus. The Bank of Japan (BOJ) launched a massive quantitative-easing (QE) program to buy up government debt, of which it now owns about half. But while the official goal was to push up annual inflation to 2%, that target has yet to be reached.

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Japan’s Demographic Lessons for Europe
BEHROUZ MEHRI/AFP/Getty Images

Japan’s Demographic Lessons for Europe

Daniel Gros
Contrary to popular belief, Japan has been extraordinarily successful in achieving economic growth, given its rapidly aging population and lack of inflation. For Europe, where the demographic future looks a lot like Japan's past, there is much to be learned from this experience.
explains why population aging need not rule out economic growth for countries that resist immigration.

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alex Finch Sep 15, 2020

Productivity increases per capita are impossible under a Socialist system and that is something Socialists will never understand. Social transfers are designed to take money from those workers who are more productive and give it to those less productive. This takes away any incentive to be more productive and encourages many to take advantage. I can’t believe how many lazy and unproductive workers exist in Europe. As a result manufacturing in Europe has become uncompetitive and to save jobs, politicians have devised a plan to make industry „greener“, and then to force these guidelines onto the rest of the world. It won’t work! Politicians in Europe can only hope to stabilize the Standard of Living at current levels, however Healthcare will deteriorate (this is what doctors themselves are predicting). Only a capitalist system will increase productivity but Europeans have become too used to the easy life, which is fine, but don’t expect much change.
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Dil Par Sep 9, 2020

A good article. Summarizes the Japanese situation well.

But what is the solution? What can Japan and/or Europe do?
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