Japan’s central bank (BOJ) has been fighting a Quixotic battle against an imaginary nemesis: price deflation (data suggests stable prices, NOT a trend for falling prices!!!).
As part of ultra-loose monetary policy, BOJs policy interest rate has not been above 1% for nearly 18 years.
During the 1990s, there were 10 fiscal stimulus packages worth more than 100T yen that aimed to cure recession & fight “deflation” (note to USA: most of the spending was on “shovel-ready” public works!) … .
Stimulus packages (i.e., fiscal deficits) have remained the policy du jour in Japan until now … .
AbeNomics is more of the same old tired Keynesian recipes, including a dose of yen devaluation that did not achieve its desired effect. What happened was that there was no rise in exports while Japan’s trade & current account surplus have decreased … !
Meanwhile, Japan’s economic growth remains far BELOW trend since 1989 … all of the above are consistent with the playbook of conventional, mainstream economic policies … this suggests a fundamental failure of economic models to grasp the nature of recession, bubbles, etc