The Yen Sets, but Does the Sun Rise? Abenomics and the Future of Japan

Aug 04, 2014

Ross DeVol, Donald Markwardt, and Nan Zhang

Publisher: Milken Institute


The year 2012 was a period of tremendous change for Japan. Having dealt with years of economic stagnation after the collapse of asset bubbles, Prime Minister Shinzo Abe's platform to restore national growth has been ambitious. But will it continue to show signs of success?

Often described as the "three-arrow policy," Abenomics -- the term coined to represent Abe’s economic policies -- has included aggressive steps designed to break the grip of deflation. The first arrow comprises monetary policy and inflation targeting. The second arrow aims to further large-scale fiscal stimuli, and the third arrow is structural reforms in many dimensions.

This report analyzes the impact of Abenomics and identifies areas, especially within the third arrow, for opportunities for improvement. The report also compares Abenomics to a number of fiscal policies and efforts in other parts of the world that have been attempted to boost economic development.