Is Abenomics working?

Japan’s economy grew by 0.7% in 2013, down from an initial estimate of 1%.

…Japan’s trade gap also rose to a new record last month, increasing by 71% to 2.79tn yen in January, official figures showed.

There is more here, via R. Lopez.  For background and context, see Edward Hugh’s recent post.

Addendum: Scott Sumner adds comments.


The left keeps getting hung up on growth and GDP even though those things really aren't that important. Studies have shown no correlation between GDP and stock market returns. Sentiment drives prices more than growth, imho. japan is viewed as an unmovable safe haven. same for Microsoft. Hard to know if Abenomis is really working or not because the bar was set to low that any improvements are nearly impossible to distinguish between abenomics and noise.

But if Paul Krugman is to be believed, Abenomics should have pulled Japan out of it's 20 year glut. And by that measure it so far has failed. Perhaps they aren't spending enough fast enough?

I happen to think they've reached some sort of natural productivity peak and they did that 20 years ago. Up against this peak progress is slower because all of the low hanging fruit has been collected.

diminishing returns..seems about right

I am the resident comments giant, now that Ashok Rao no longer posts here. Four mentions by TC--that's a hat trick and a third! As for Japan, I gave up about 15 years ago trying to figure them out, but keep in mind their Debt-to-GDP ratio is closer to Greece at about 120% rather than the widely reported 200%+, once you factor in their domestic savings and corporate surplus (this is shown in the Edward Hugh's recent post, in the last graphic too).

You *are* the comments giant! In fact, I think you're ready for your own blog now. We'll miss you!'s hoping

You never followed up to TWIFs follow up. I wanted to see the mental gymnastics your mind is capable of. Will you ignore the entire post and focus on one weak spot to dismiss his entire point? Simply dismiss the entire follow up as racist? Ignore all logic and say something inane and meaningless? Or something else?

@XVO - I saw TWIF's long-winded post on race, and he made just one point, essentially, 'race exists at the polar extreme, just like it's correct to say teenagers are a different age category than adults'. And he simply makes the well known observation that genes (DNA combinations) correlate sometimes to phenotype (looks), that is, 'blacks' have certain gene markers not found in 'whites' or 'yellows'. Well, that's true but does not detract from my point that there's not such thing as race for the same reason that you can say that there's no such thing as "age" such as in 'minor' or 'adult' because a girl who is 17 years old is nearly an adult, and it is only an artificial distinction such as made in law that makes age categories meaningful (i.e., that 17 year olds cannot have sex with adults, or 20 year olds cannot buy beer, yet one year later they can). I let TWIF have the last word as a munificent gesture.

So there is no difference between breeds of dogs? It's just a social construct?

Clearly there is such a thing as race, because it's descriptive of something in reality. The fact that people are different and categorizable is all that's required to show that race is a useful concept. Genes don't just sometimes correlate to phenotype. THEY ALWAYS DO!! Otherwise you'd see things like alligators giving birth to camels. What you have said is insanity. You are a true believer and will never be convinced of anything, GOOD DAY!

Does "Napoleon complex" apply in a non-physical, internet commenting sort of sphere?

As I understand it, Abenomics relies on QE and economic reforms. The former have been easy and quite successful (even with the increase in sales tax) but the latter haven't really materialised. I suspect that is the main reason that growth isn't what it could be.

Anyone willing to predict Abegeddon for Abenomics?

Not that I expect Liberal Democrats to be all that concerned. Their hold on power, especially institutionally, remains formidable.

Monetary policy has not appeared to generated inflation:

Overall, I'd say it's still to early to tell ...

... but the downward revision makes the case for a positive impact much less solid ...

I suspect that Japan will be fighting a 100 year uphill battle trying to re-inflate the economy, since the country is literally slowly dying. Demographics is destiny.

I tend to agree, so I'm curious what that means for the whole planet when its demographics looks a lot like Japan's do now, in 50-60 years.

On the other hand, Japan today even 'uninflated' is a very wealthy, very stable place to live.

Historically, we have invested in the next generation. If there is no next generation, better invest in robots. Japan is, of course, the canary in the coal mine here.

I love the way this blog toggles between "Where will we find the people?" and yesterday's theme: "What will we do with all these people?"

Maybe the blog does but I'm pretty much stuck at 'where will we find the people'

It should probably read, "Where will we find the smart and productive people?"

TC, when you cite a commenter, would you kindly add a notation of 1%er where applicable?

It's not at all uncommon to find One Percenters in the DC area, which is one of the wealthiest areas in the USA (and chances are you, reading this, are in DC). My family has been in the Dc area for several generations, so it's no surprise we are multiples of the 1-percent (which only requires a mere $4.5M net worth to achieve...haha I think we breached that level in the early 1990s).

It's easy to do if you are a Greek too: open a fast food restaurant or ethnic food store in the area and/or buy real estate (Greeks trust land more than money in the bank, since banks historically are unstable in Greece and, like in Asia, practice financial repression since they give less than the inflation rate in interest), and lo and behold, within a couple of decades you're rich, especially as rent-seekers from all over the USA come to DC and the population expands. Why is that so hard to understand? It's not rocket science (which BTW I have taken courses in; is there anything I can't do?)

Scott Sumner has it right, 4Q to 4Q you are looking at real 2.5 percent growth, which by the standards of the last 20 years in Japan is a great success...

Japan is a very long experiment in tight money and zero inflation-mild deflation starting in 1992, and it failed badly, as Japan was outperformed by such nations as statist France. Forget your ideologies, your models, your dogmas forget everything. Tightt money does not work, and Japan is proof.

If you are old enough, you can remember the 1980s, when every business magazine had Japan Inc on the cover every day and the story was they were a business-oriented nation and would blow us off the for structural impediments, in the 1980s everybody said Japan is an example of the explosive growth you would get if we lowered our structural impediments....

But then the Bank of Japan went to tight money in 1992, and no one even heard from japan again, and Korea and China become the innovative and growing nations....

"Japan’s economy grew by 0.7% in 2013, down from an initial estimate of 1%."

It turns out that the BBC is wrong. The 0.7% estimate is the rate of increase in RGDP in 2013Q4. RGDP in 2013 as a whole was up by 1.5% over 2012 (Table 2-1.1):

More importantly, year on year RGDP growth was 2.5% in 2013Q4.

The Dalai clique takes for granted that with the backing of the only superpower in the world, there is hope for so-called "Tibet independence." In fact, the U.S. has not met all of the Dalai Lama's demands.

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