what is abenomics 
abenomics is the nickname for the economic policies set out for japan in 2012 when prime minister shinzo abe came into power for a second time abenomics involved increasing the nation s money supply boosting government spending and enacting reforms to make the japanese economy more competitive the economist outlined the program as a mix of reflation government spending and a growth strategy designed to jolt the economy out of suspended animation that has gripped it for more than two decades 1 understanding abenomicsabenomics refers to the economic policies of a particular politician in the same way that reaganomics or clintonomics does abenomics was promoted as a way to shake japan s economy out of a period of minimal growth and overall deflation japan s economic troubles dated back to the 90s also known as the lost decade it was a period of marked economic stagnation in japan following a massive real estate bubble burst in the 1980s and japan s asset price bubble burst in the early 90s the japanese government responded to the economic fallout by running massive budget deficits to fund pubic works projects in 1998 economist paul krugman argued in a paper titled japan s trap that japan could raise inflation expectations by committing to an irresponsible monetary policy for a period of time thereby cutting long term interest rates and promoting the spending needed to break out of economic stagnation 2 japan adopted some of krugman s recommendations expanding the money supply domestically and keeping interest rates remarkably low this facilitated an economic recovery beginning in 2005 but it ultimately did not stop deflation in july 2006 japan ended its zero rate policy as abe took power in his first term as prime minister abe would resign as prime minister suddenly in 2007 but continued to serve in the ruling party though still having the lowest interest rates in the world japan could not stop deflation the country saw the nikkei 225 drop more than 50 between the end of 2007 and the beginning of 2009 in part due to the economic malaise japan seemed unable to shake abe s party the liberal democratic party of japan ldp lost power to the democratic party of japan abenomics and the three arrowsabe began a second term in december 2012 soon after resuming office he launched his abenomics plan to bolster japan s stagnant economy in a speech following his election abe announced that he and his cabinet would implement bold monetary policy flexible fiscal policy and a growth strategy that encourages private investment and with these three pillars achieve results abe s program consisted of three arrows the first was printing additional currency between 60 trillion yen to 70 trillion yen to make japanese exports more attractive and generate modest inflation roughly 2 the second arrow was new government spending programs to stimulate demand and consumption to stimulate short term growth and to achieve a budget surplus over the long term the third component of abenomics was more complex a reform of various regulations to make japanese industries more competitive and to encourage investment in and from the private sector this included corporate governance reform easing of restrictions on hiring foreign staff in special economic zones making it easier for companies to fire ineffective workers liberalizing the health sector and implementing measures the help domestic and foreign entrepreneurs the proposed legislation also aimed to restructure the utility and pharmaceutical industries and modernize the agricultural sector most important perhaps was the trans pacific partnership tpp which was described by economist yoshizaki tatsuhiko as potentially the linchpin of abe s economic revitalization strategy by making japan more competitive through free trade did abenomics work like all japanese economic policy since the bubble burst abenomics has worked well at times and stalled at others inflation targets have been met and japan s unemployment rate is more than 2 lower than when abe came to power for the second time similarly nominal gdp has increased and corporate pre tax profit and tax revenues have both seen significant rises however japan s periods of success have been halted at times by global economic forces and the country s most significant economic problem a rapidly aging population has increasingly taken the forefront 