This article basically discusses the kind of economic policy
Japan’s Prime Minister Shinzo Abe is adopting. Some of the spending to improve
the country’s ‘rusting’ infrastructure to prevent disasters such as the one on
December 2nd when a tunnel collapsed and crushed 9 motorists. Advocates
of the increased public spending believe it will help the economy out of the
recession while critics believe it’ll just add to Japan’s already huge debt. Another
policy that has been adopting is increasing money supply by printing more money,
which is also reducing the value of the currency increasing exports. However, the current account still
struggles because of the need for energy imports. If the public spending is
successful, it could result in increased efficiency and higher tax revenues. Some
call Abe’s policies ‘Abenomics’.
I think that one of Japan's largest problems losing international competitiveness. It is in danger of losing most of its industries to Korea and China. If Japanese car industry is to survive, it must take over German citadel. Otherwise there will be no market left for Japanese manufacturers.
ReplyDeleteI completely agree with Japan in printing more money and weakening the yen because international competitiveness is an important factor to get an economy going. However, I think Abe should avoid all the government spending because it would only add to their massive debt. Maybe a different route to do this, like higher taxes.
ReplyDeleteOne of the main issues Abe has to deal with is Japan's central bank. I read up on his approach of fiscal stimulus and his monetary policy and found out that the central bank seems to emphasize their long held belief that public finance must be more sustainable which, I believe, is them addressing the debt that Abenomics might aggravate.
ReplyDeleteHere is the link to the article:
http://www.economist.com/news/finance-and-economics/21570710-bank-japan-tests-limits-shinzo-abes-economic-power-win-some-lose