| Description |
Abenomics is named after the Prime Minister of Japan, Shinzo Abe, as he advocated for his "three-arrow policy" in the general election of December 2012. In 2013, the Central Bank of Japan introduced an economic package filled with fiscal policies, quantitative easing, and structural reform to turn around years of persistent deflation. The real-estate price bubble in the late 1990s, the financial crisis in 2008 and the Great East Japan Earthquake are all events which led to the rise of Abenomics. The purpose of Abenomics is to increase real domestic output and to combat the strong yen as well as the persistent falling prices. Multiple theories were used to explore as to whether or not these policies have been beneficial, ranging from the theory of Ricardian equivalence, theory of money velocity and the Keynes multiplier effect. However, since its implementation, the Japanese economy has remained sluggish because of external and internal factors. Internally, the country is overly developed and the population is declining. Externally, the yen has appreciated in contrast to the government's aggressive measures to weaken the yen due to the global acceptance and perception of the yen being a safe haven asset from various studies, which explains why Abenomics has yet to be proven a success. |
