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Abenomics After Abe

Summary:
Reviving Japan’s sluggish economy will require incoming Prime Minister Yoshihide Suga to make a clear break from his predecessor and patron, Shinzo Abe, and pursue wide-ranging structural reforms. Suga’s best strategy might therefore be to call a snap general election to gain the popular mandate he will need. TOKYO – Japan’s parliament is scheduled to confirm Yoshihide Suga this week as the country’s new prime minister. He will replace Shinzo Abe, who announced his resignation last month for health reasons, after almost eight years in office. Japanese and international observers are now asking whether the Abe government’s economic-policy course (dubbed “Abenomics”) will change significantly under Suga, and if so,

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Reviving Japan’s sluggish economy will require incoming Prime Minister Yoshihide Suga to make a clear break from his predecessor and patron, Shinzo Abe, and pursue wide-ranging structural reforms. Suga’s best strategy might therefore be to call a snap general election to gain the popular mandate he will need.

TOKYO – Japan’s parliament is scheduled to confirm Yoshihide Suga this week as the country’s new prime minister. He will replace Shinzo Abe, who announced his resignation last month for health reasons, after almost eight years in office. Japanese and international observers are now asking whether the Abe government’s economic-policy course (dubbed “Abenomics”) will change significantly under Suga, and if so, how.

The answer will have important geopolitical implications. Japan, after all, is still struggling to overcome the negative shock from COVID-19, and its economic health is becoming ever more pivotal in view of the deepening confrontation between the United States and China.

Many outside Japan might assume that Suga will change little, and he presented himself to the ruling Liberal Democratic Party (LDP) as the “continuity” candidate to replace Abe. That was, perhaps, the best card that he could have played, having served as cabinet secretary, the second most powerful position in Japan, for the entirety of Abe’s eight-year tenure.

On this view, Suga will remain safe by sticking closely to Abenomics. The massive quantitative easing undertaken since 2013 by Bank of Japan (BOJ) Governor Haruhiko Kuroda – an Abe appointee – will continue. Similarly, Suga will avoid vigorous and hasty fiscal tightening, even though the Abe government’s pandemic-response measures have further increased Japan’s net public debt, which, at

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