Social Sciences
In the 2013 Winter issue of International Economy, economic writer and APP member Richard Katz outlines "Why the Abe economy will fail."
Mr. Katz is editor of the semi-weekly Oriental Economist
Alert.
Abe is a victim of his own engineered good fortune. Katz writes:
Abenomics, the popular term for the economic policies of new Japanese Prime Minister Shinzo Abe, is likely to fall far short of its goals of reviving long-term vitality in Japan, although it could succeed in providing a temporary and illusory lift to both the economy and Abe?s Liberal Democratic Party. To provide a lasting revival, Japan needs a three-pronged approach of monetary stimulus, the right kind of fiscal stimulus, and structural reform. None of the three work without the other two.Abe, however, is focused only on the first two. With his party just back in power, he doesn?t want any reforms that step on toes. As a result, Japan is more likely to do what it has repeatedly done after previous bouts of stimulus:fall back into lethargy as soon as the stimulus is withdrawn. Beyond that, political obstacles from the Ministry of Finance, the Bank of Japan, and some parts of the business community are already preventing Abe from even implementing many of his ideas on fiscal and monetary stimulus.
.....
Abe?s notion of a ?growth strategy? is mainly a trickledown approach of increasing corporate profits via a cheaper yen and tax cuts in the false hope that this would lead to more investment, hiring, and wage hikes. Real structural reform has to tackle Japan?s deep-seated defects
.....
Unfortunately, Japan is not a healthy economy and so is unable to respond to fiscal-monetary stimulus in the normal way. The household share of real national income has fallen. People are spending as much as they can, with the savings rate now down to around 2 percent from 13 percent back in 1997. If households had more money, they?d spend more. Instead, the scheduled consumption tax hike will leave them with even less income.This chronic shortfall in consumer demand is why Japan had to depend so unhealthily on a growing trade surplus in 2002?2007, a tactic that Abe wants to repeat by driving the yen as low as ¥100 per dollar, according to some of his aides.
FULL TEXT HERE
- Year Three Of Abenomics: Wither The Third Arrow
Richard Katz, Editor of the Oriental Economist and APP member spoke to the Foreign Correspondents Club of Japan on February 2, 2015 on the prospects for Abenomics. He speaks to the need for institutional renovation if Japan's economy to revive. This...
- Abenomics In Deep Trouble
Policymakers need to realize the clock is ticking by Dr. William H. Overholt, APP Board member and president of Fung Global Institute, a Hong Kong-based research center. Opinions expressed here are his own and have not been reviewed by his employer....
- Whither Japan's Economy
Monetary policy as golfMainly due to a severe downturn in personal consumption stemming from the April 1 consumption tax increase from 5% to 8%, Japan's GDP in April-June tumbled a real 6.8% from the previous quarter on an annualized basis. This is...
- Oecd Economic Studies On Asia
Economic Survey of China, OECD, 2/2/10, 234pgs."With the help of massive government stimulus action, China is now leading the world economy out of recession. Already the world?s second largest economy, China could well overtake the United States to become...
- Troubling Lessons From Japan's Economy
?Lost Decade? in Translation: What Japan's Crisis could Portend about Recovery from the Great Recession, by Syed, Murtaza H.; Kang, Kenneth ; Tokuoka, Kiichi by IMF Working Paper No. 09/282, December 1, 2009, 40pgs. Supplied Summary: Is the recovery...
Social Sciences
More Sizzle than Steak
Mr. Katz is editor of the semi-weekly Oriental Economist
Alert.
Abe is a victim of his own engineered good fortune. Katz writes:
Abenomics, the popular term for the economic policies of new Japanese Prime Minister Shinzo Abe, is likely to fall far short of its goals of reviving long-term vitality in Japan, although it could succeed in providing a temporary and illusory lift to both the economy and Abe?s Liberal Democratic Party. To provide a lasting revival, Japan needs a three-pronged approach of monetary stimulus, the right kind of fiscal stimulus, and structural reform. None of the three work without the other two.Abe, however, is focused only on the first two. With his party just back in power, he doesn?t want any reforms that step on toes. As a result, Japan is more likely to do what it has repeatedly done after previous bouts of stimulus:fall back into lethargy as soon as the stimulus is withdrawn. Beyond that, political obstacles from the Ministry of Finance, the Bank of Japan, and some parts of the business community are already preventing Abe from even implementing many of his ideas on fiscal and monetary stimulus.
.....
Abe?s notion of a ?growth strategy? is mainly a trickledown approach of increasing corporate profits via a cheaper yen and tax cuts in the false hope that this would lead to more investment, hiring, and wage hikes. Real structural reform has to tackle Japan?s deep-seated defects
.....
Unfortunately, Japan is not a healthy economy and so is unable to respond to fiscal-monetary stimulus in the normal way. The household share of real national income has fallen. People are spending as much as they can, with the savings rate now down to around 2 percent from 13 percent back in 1997. If households had more money, they?d spend more. Instead, the scheduled consumption tax hike will leave them with even less income.This chronic shortfall in consumer demand is why Japan had to depend so unhealthily on a growing trade surplus in 2002?2007, a tactic that Abe wants to repeat by driving the yen as low as ¥100 per dollar, according to some of his aides.
FULL TEXT HERE
- Year Three Of Abenomics: Wither The Third Arrow
Richard Katz, Editor of the Oriental Economist and APP member spoke to the Foreign Correspondents Club of Japan on February 2, 2015 on the prospects for Abenomics. He speaks to the need for institutional renovation if Japan's economy to revive. This...
- Abenomics In Deep Trouble
Policymakers need to realize the clock is ticking by Dr. William H. Overholt, APP Board member and president of Fung Global Institute, a Hong Kong-based research center. Opinions expressed here are his own and have not been reviewed by his employer....
- Whither Japan's Economy
Monetary policy as golfMainly due to a severe downturn in personal consumption stemming from the April 1 consumption tax increase from 5% to 8%, Japan's GDP in April-June tumbled a real 6.8% from the previous quarter on an annualized basis. This is...
- Oecd Economic Studies On Asia
Economic Survey of China, OECD, 2/2/10, 234pgs."With the help of massive government stimulus action, China is now leading the world economy out of recession. Already the world?s second largest economy, China could well overtake the United States to become...
- Troubling Lessons From Japan's Economy
?Lost Decade? in Translation: What Japan's Crisis could Portend about Recovery from the Great Recession, by Syed, Murtaza H.; Kang, Kenneth ; Tokuoka, Kiichi by IMF Working Paper No. 09/282, December 1, 2009, 40pgs. Supplied Summary: Is the recovery...