Breakthrough or Dead End? What Can we Learn from Abenomics?

The ‘Japanese miracle’ after World War II was the one of the most magnificent period of modern Japanese history. The rapid economic growth brought rising living standards, social harmony and satisfaction. By the 1980s Japan became one of the most developed countries in the world. However, as the 90s progressed the relative position of the country gradually deteriorated. On the surface Japan had seemed to manage the global crisis of the 1970s much better than other developed countries. At that time they implemented the same measures that had proved to be so successful before, and which although dampened the negative external effects prevented the country from adapting to the new situation thoroughly. It took leading countries two decades to get over this by adopting drastic measures and procedures and usher in the era of Great Moderation bringing an economic boom in the 90s and early 2000s. But not in Japan. The country that had been considered a success story for a long time faced a period of economic hardships, which is by no means a passing phase in the history of the country. The reasons for this were very deep and unique structural problems going back several decades. The quarter-of-a-century-long agony of Japan could be rightly called the era of Great Stagnation. The objective of Abenomics[1] is to break out of this hard situation. In this paper we examine what new elements the Abe Shinzo administration has introduced to manage the crisis, what he has achieved so far and what are the prospects for the third largest economy of the world (Walatabe, 2015; Muraközy, 2016).*

Journal of Economic Literature (JEL) codes: E6, P1, O23.

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