Journal of Applied Finance & Banking

Did Abenomics’ Two Arrows Hit the Bulls?

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• Abstract

  Over the past two decades, Japan has been perplexed by a series of problems, like ageing population, deflation, huge public debt and sluggish growth. Shortly after taking his office as the Prime Minister of Japan in December 2012, Shinzo Abe has implemented a package of expansionary economic policies, known as “Abenomics,” to revive the economy. By focusing on the first two “arrows” – aggressive monetary policy and flexible fiscal policy – this paper attempts to evaluate their performance over the past two years. It was found that although the Bank of Japan (BOJ) has successfully made the yen depreciated by around 30 percent and maintained a low interest rate environment, most of the targets are still to be met, and there are full of challenges lying ahead.