Abenomics and Asset Prices: Is It Case of Self-Fulfilling Expectations?

Abstract

Asset prices have responded in a surprising way to the announcement of a policy package in late 2012 by Shinzo Abe, then the President of the LDP. The package (henceforth, Abenomics) has placed a central focus on aggressive monetary easing. The yen has weakened by about 20% against the dollar since then. Japan’s stock market has gone up by about 30%. I offer a tentative evaluation of Abenomics in the light of the experience with non-conventional monetary policy (NCM) by major central banks including the Bank of Japan (BOJ).