Analysis On The Theory&Result Of Abenomics

After the high-speed development term, the bubble prosperity, and the bursting of the bubble economy, the Japanese economy turned sharply down, and sank into stagnation and deflation more than20years. Later successive government carried out various policies and made efforts to recover the Japanese economy out of deflation, but failed. During Junichiro Koizumi’s tenure, the Japanese economy started a slow recovery. But the2008financial crisis made a serious blow to the fledgling Japanese economy, followed by the European debt crisis and3.11East Japan earthquake, Japanese economy got into shrinking again.Shinzo Abe once again became Prime Minister of Japan. He made a plan to revitalize Japan’s economy, named as Abenomics by the media. Abenomics includes three aspects. The first one is the bold monetary policy, mainly quantitative easing monetary policy (QE). The second is flexible fiscal policy, on the one hand using the fiscal stimulus, on the other hand raising the consumption tax to balance the finances. The third is economic growth strategy, which is focused on industry revitalization, international development and new market innovation.Japan has created many economic myths in the world. Along with its unique Japanese model, Japan had kept rapid growth for decades, but fell into long-term economic stagnation and inflation at the peak time. Japan’s economic recovery is not only important to Japan, but also will bring great benefit to the global economy, which can better support the American economy and the European economy. Japanese economy is a driving force for economic growth in Asia. As the most developed country in the region, Japan keeps a deep cooperation with Asian countries. Especially, for South Korea, China and Taiwan, Japan is an important trading partner and investor.Abe is making an attempt and experiment to recover Japanese economy. Whether it will success or not, it should provide a model for other developed countries to stimulate economic growth, and give advices for developing countries to make economic and structural reform, as well as developing the market economy. The boom of Japanese economy in the short-term caused many scholars attention on Abenomics, but most scholars’ study focused on QE, lacking a comprehensive and overall research about Abenomics.In this paper, I made a comprehensive and detailed analysis on Abenomics, for the first time making a systematically analysis on the fundamental economic theory about Abe’s three arrows. I analysed the global economic situation and Japan economic background first. Second, I made a detailed description about the bold monetary policy, flexible fiscal policy and economic development strategy. In the five part, I analyzed Abenomics short-term impact on Japanese economy, and advantages&challenges that facing Abenomics. Finally I predicted the future about Abenomics.Since the implementation of Abenomics, the real quarter GDP growth of Japan was better than before. The rapid depreciation of the yen led to export growth, and the Nikkei225Index reached the climax of these years. As the national consumer price index (CPI) rising continuously, the Japanese economy show signs out of deflation. The employment situation and industry market also both got good news.But there are still some difficulties hindering Japan’s development, such as the industrial hollowing, inadequate investment space, low birthrate and aging, energy scarcity and high debt. With the depreciation of the yen, the cost of energy imports in Japan increased lot. As a result, Japan’s trade deficit has already lasted for24months till July2014.Although Abenomics can rely on monetary policy to achieve short-term success, considering so many difficulties challenging Abenomics, without real fundamental change about the third arrow Abe may not achieve his goal in the long term.