Abenomics: What Japan’s Economic Experiment Can Teach the Rest of the World

Japan’s economy shifted from being the envy of the world in the 1980s to today's case study in stagnation. The country's nominal GDP for 2015 is mostly unchanged from levels in 1995 even as the US nominal GDP grew by more than 130 percent, reports the Economist. “To reflate Japan and reform it, Shinzo Abe, prime minister since December 2012, proposed the three ‘arrows’ of what has become known as Abenomics: monetary stimulus, fiscal ‘flexibility’ and structural reform,” the article explains. Japan’s efforts offer lessons for other countries with aging populations, stagnant demand and high debt levels, suggesting that austerity can be a “self-defeating” policy while fiscal expansion can be “affordable.” Critics suggest that programs like Abenomics delay needed structural reforms, including increased immigration and integration. Japan’s program may have fallen short of goals, but the economy would likely be worse without fiscal stimulus. The article concludes that economic power often rests with consumers, and boosting consumer confidence can increase economic growth. – YaleGlobal