It has been eight months since the Abe administration was inaugurated. Its catchphrase “Japan is back” is steadily being embodied, which is confirmed by the fact that the term “hollowing-out” has disappeared from media such as television and newspapers. I would like to discuss the current conditions and future challenges for Abenomics while attempting to present a retrospective assessment of Takahashi Korekiyo’s fiscal policies, which could be referred to as the Abenomics of the prewar period. As a first step to reviving Japan, the Abe administration aims to bail the nation out of a deflationary economy by undertaking drastic monetary easing by the Bank of Japan (BOJ). Before it was launched, Abenomics faced rising skepticism pointing out that monetary easing would not be effective in controlling the economy’s deflationary trends. Moreover, critics argued that no matter how sweeping the easing was, it would not ... ... [Read more]

  The Japanese cabinet headed by Abe Shinzo is attracting worldwide attention for its anti-deflationary and economic revitalization package, which is known as “Abenomics.” Behind this attention, there is concern that failure of the package, which includes an unprecedented level of monetary easing, would not only send the Japanese economy into a crisis situation but also affect the growth and stability of the entire global economy. For the time being, it has given people hope through the rise of share prices and the reversal of the excessive appreciation of the yen. An increase in capital investment in the corporate sector suggests a resurgence of entrepreneurship. However, continuation of economic growth beyond this short-term economic recovery will depend on whether or not the government manages to carry out the painful structural reform needed for economic reconstruction. Structural reform for continued economic development is referred to ... ... [Read more]

< Key Points > * The distribution of energy, water, and food will become priority issues * Now is a good time to move away from finance capitalism based on oil resources * Pipelines will serve as a means of readjusting national interests among states John Maynard Keynes once wrote, “We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another.”... [Read more]

How to take advantage of women’s abilities is an important issue for both the Japanese economy in general and corporations in particular. This feature story will examine why it is important to utilize women’s power, what kind of positive effects the full employment of women will bring about economically, and how the employment of women should be promoted.... [Read more]

What Is “Abenomics”? The top policy priority for the administration of Prime Minister Shinzo Abe is to revitalize the Japanese economy by bailing the nation out of its prolonged deflation at an early stage and stemming the yen’s excessive appreciation. The Abe Cabinet formulated the “Urgent Economic Countermeasures for the Revival of the Japanese Economy” on Jan. 11 and decided on a supplementary budget to finance the package on Jan. 15. On Jan. 22, the government and the Bank of Japan (BOJ) issued a joint statement announcing they will deepen cooperation to overcome deflation at an early date and achieve sustainable growth.... [Read more]

Japan, reeling from years of sluggish growth and deflation, can learn from its experience in the 1930s, Deputy Prime Minister and Finance Minister Taro Aso said in an interview. The aggressive monetary easing policy adopted by then Finance Minister Korekiyo Takahashi (1854-1936) boosted demand, making Japan the first country among “Western” nations to emerge from the Great Depression. He said the key to success is simultaneous implementation of three policy steps – massive monetary stimulus by the Bank of Japan (BOJ), fiscal stimulus and measures to push the private sector toward capital investment. (The interview was conducted by FACTA monthly magazine on Dec. 20, 2012, prior to his appointment as financial chief in Prime... [Read more]

The 2 percent inflation target set by the government and the Bank of Japan (BOJ) is an appropriate level. The BOJ’s major shift in its monetary policy is a great step toward overcoming deflation. The new government of Prime Minister Shinzo Abe has asked the BOJ to adopt an inflation target of 2 percent and the bank has accepted it, underscoring a significant change in its policy as it had previously held to a goal of “1 percent for the time being.” I have estimated that the most appropriate level of inflation is 1 percent to 2 percent, based on the following grounds.... [Read more]

As China is gradually recovering its confidence as a major power, Japan has come to feel threatened by it both economically and militarily. While this is taking place in the context of China’s rapid economic growth, one wonders if the general assessment of the Chinese economy is an overestimation? In a recent discussion, Mr. Toshiya Tsugami and Mr. Tomoo Marukawa, both experts on the Chinese economy, were divided over the economy’s potential for growth. Meanwhile, they shared the view that both Japan and China are faced with various inherent problems in their respective economies and that they cannot afford to be wasting time in being at odds with each other over the issue of the Senkaku Islands.... [Read more]

The financial crisis in the euro zone has evolved into an actual economic crisis as a result of the credit contraction it incited. The European Central Bank (ECB) and International Monetary Fund (IMF) to a certain extent delayed the inevitable with their emergency assistance, but this crisis will not be resolved unless the European Union fundamentally reforms the economic and financial structures at their core. For Japan, the crisis in the euro zone is not just fire on the opposite riverbank. This is because Japan’s government debts, including those of central and local governments, have surpassed those owed by Greece’s governments at the epicenter of the euro zone crisis. Japan’s government debts currently total around 200% of the country’s domestic product (GDP). Moreover, social security and related expenses are likely to continue rising in Japan... [Read more]

Introduction It is a great honor for me to have the opportunity to speak to you today at the prestigious Japan National Press Club. This is my third time speaking here, having initially done so in May 2008 — my first public speech after becoming Governor of the Bank of Japan — and then again in May 2010, around the time when the European debt problem triggered by the crisis in Greece started to overshadow the global financial markets. Given that today happens to be just a few days after the Bank implemented measures to further enhance monetary easing, this is my first opportunity to provide a thorough explanation of this latest policy decision.... [Read more]