Three Arrows of “Abenomics” and the Structural Reform of Japan: Inflation Targeting Policy of the Central Bank, Fiscal Consolidation, and Growth Strategy

Naoyuki Yoshino () and Farhad Taghizadeh-Hesary ()

No 492, ADBI Working Papers from Asian Development Bank Institute

Abstract: “Abenomics” refers to the economic policies advocated by Prime Minister Shinzo Abe who became prime minister of Japan for a second time when his party, the Liberal Democratic Party, won an overwhelming majority at the general election in December 2012. Abenomics has “three arrows”: (i) aggressive monetary policy, (ii) fiscal consolidation, and (iii) growth strategy. The Japanese economy faces an aging population and expanding social welfare expenses. No other country has experienced Japan’s rapid growth of retired people. In this paper we will explain these three aspects of Abenomics and the current state of the Japanese economy, and examine what further remedies may be required if Japan is to recover from its long-term deflation. We look at such proposals as hometown investment trust funds and postponing of the retirement age through the introduction of a flexible wage rate system.

Keywords: Abenomics; structural reform; hometown investment funds; monetary policy; fiscal consolidation; growth strategy (search for similar items in EconPapers)
JEL-codes: E52 E62 G21 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-08-03
New Economics Papers: this item is included in nep-cba and nep-mac
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Citations: View citations in EconPapers (11)

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