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Abenomics of Japan: What Was It? Could This Conquer Japan・s Decade-Long Deflation?  
 
Product Ref: 13/534C Company: Japanese Government

Product Type: Case Industry: Government

Related Product(s): Teaching Note
Authors: Mitsuru Misawa   
The economic policies advocated by Prime Minister Shinzo Abe of Japan, dubbed Abenomics, have weakened the yen and given new life to Japan・s stock market. There are three components of Abenomics: monetary easing, fiscal spending, and growth strategies. The economy-boosting effects of Abenomics and the Bank of Japan・s (BOJ・s) bold monetary easing policy are stirring up considerable global interest in Japan.

Of the three components of Abenomics, monetary easing and fiscal spending are unlikely to inflict much pain on the public, apart from the fact that younger generations will be forced to pay back the debt the government is rapidly incurring. But the third component, growth strategies, can only be effective when addressing regulatory issues that have long been left untouched. What Japan needs most is regulatory and structural reform. These painful, drastic reforms will shuffle the deck for protected businesses. While structural reforms almost always inflict pain on vested interests protected by regulatory walls, creative initiatives by newcomers benefit consumers and help to revitalize the economy.
Functional Area : Economics & Business Policy

Learning Objective: This case will provide students with a better understanding of the role, responsibility, and purpose of the Japanese government in light of the fact that the country has been struggling with deflation for two decades. More specifically:
1.Students will study Japan・s economic policies, dubbed Abenomics and learn how these policies interact with world economies.
2. Students will learn that the government of Prime Minister Abe faces many practical economic challenges. But it also faces an attitudinal challenge: the pessimism born of years of economic stagnation.
3. Students will learn that longer-term growth prospects will depend on the new growth strategy, which should include bold regulatory reform measures to help boost potential growth.
4. Students will learn that nations have to make effort to restore their fiscal health in the wake of the sovereign debt crisis, but they may be called on to take fiscal action in the short term to stimulate their economies.
5. Students will learn that the Bank of Japan has pledged to achieve 2% price growth in two years by bold monetary easing. The theory is that this will help buoy capital spending and housing investment, resulting in economic growth.
6.Students will learn about what the lower currency means for their own economy, since the Japanese economy, in dollar terms, is shrinking [U5] as the yen becomes weaker.
Length: 22 pages Country: Japan

Pub. Year: 2013 Level of Difficulty: 3
         
This product type is available in the following language(s):      English
         
Related Information: N/A
 
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Case (13/534C) HK$58 / US$7.5
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