¡°Abenomics¡± has made a good start. Thanks to the expansionary monetary policy and the fiscal expenditures, the Japanese economy has resumed growth.
However, it is an upswing phase of a normal business cycle and, as such, it will not necessarily lead to the sustainable economic growth and consolidation of government¡¯s debt, the twin objectives of Abenomics.
An important feature of Abenomics is its over-reliance on monetary policy. Prominent monetarists in Prime Minister Shinzo Abe¡¯s economics team have argued over a decade that since deflation is a monetary phenomenon, it can be cured by monetary policy.
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