CARF-F-390|Asset Price Bubbles and the Financial System
Abenomics after Four Years: Formidable Challenges ahead with Limited Policy Tools
Japan’s ruling coalition recently won the upper house election and Prime Minister Shinzo Abe has declared that he would accelerate the government’s attempt to revitalize the economy, especially its fight against deflationary forces in the economy. To this end, the government has decided to provide a fiscal stimulus that is expected to exceed 28 trillion yen. The Bank of Japan (BOJ) has joined in the effort by its decision to ease monetary policy further on July 29, 2016. The joint monetary-fiscal stimulus has come after almost four years of policy stimuli to raise inflation and economic growth. I discuss the backgrounds for the failure of Abenomics to achieve its goals so far and limitations the government/the BOJ face in their attempts to stimulate the economy further.