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HOME > Macro Economy > Can Abenomics Restore Japan's Growth?

Can Abenomics Restore Japan's Growth?

Macro Economy Proceedings, Issue No. 9, January, 2014 (PDF: 908kb)

Can Abenomics Restore Japan's Growth?
Takeo Hoshi

Senior Fellow and Director, Japan Studies Program, Shorenstein Asia-Pacific Research Center, Stanford University

Professor of Finance, Stanford Graduate School of Business


‘Abenomics,’ the economic policy pursued by Japan since the Abe government took office at the end of 2012, has been discussed frequently inside and outside the country. Many observers of the Japanese economy apparently hope that Abenomics may finally end Japan’s economic stagnation. Can Abenomics restore Japan’s growth?

After describing the policy’s three ‘arrows,’ this paper addresses the question by reviewing why Japan fell into a prolonged stagnation and then examining how--and whether--each of the three elements will hit their targets and restore dynamism to the economy. The conclusion is that while it is promising, Abenomics cannot succeed unless the government refocuses the growth strategy ‘arrow’ on the programs that are indeed likely to raise the long-term growth rate.