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Taiki Murai, Gunther Schnabl



Articles by Taiki Murai, Gunther Schnabl

Japan Embraced Debt as a Way out of Its Budget Crisis. It’s Not Working.

October 12, 2020

The sudden resignation of Japans Prime Minister Shinzo Abe has led to evaluations of his so-called Abenomics. Many have praised Abe’s aggressive monetary policy because the long shopping list of the Bank of Japan (government bonds, corporate bonds, ETFs and real estate investment trusts) has inflated stock and real estate prices (Shirai 2020; Financial Times 2020). Concerns remain on the fiscal side since Abe’s consumption tax hikes from 5 percent to 8 percent in 2014 and to 10 percent in 2019 are widely seen as a failure (The Economist 2020). Indeed, Abe resolved Japan’s deep-seated fiscal problems only superficially.

Tax Revenues of Japan’s Central Government Source: Ministry of Finance, Japan. – Click to enlarge
The core of the problem is cheap money issued

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