“Recognizing the duty of the Senate to condemn Modern Monetary Theory and recognizing that the implementation of Modern Monetary Theory would lead to higher deficits and higher inflation.” I guess on the one hand that we should be happy that anyone is even aware of Post Keynesian economic theory. Scholars in this area have toiled largely in vain for going on a century (marking Keynes’ General Theo

Japan’s fiscal policy was expansionary only in 2013, the first year of Abe's tenure, and has become contractionary since then. The government continues to raise existing taxes and introduce new taxes, squeezing more and more money out of the economy at the cost of increased spending. For example, the Japanese government is now contemplating a new tax on leaving the country for everyone, both Japan

Several observers have noticed recent changes in tone in monetary policy in Japan. First, as the media reports, the BOJ governor Haruhiko Kuroda gave a speech at Zurich on November 13. In the lecture, he suggested the possibility of the “reversal rate,” the possibility that lower interest rates would become contractionary by reducing the banks' interest margins. Kuroda refers to the paper by Marku

On December 20, the U.S. Congress has just passed the tax reform bill. Although the bill is highly controversial, no one doubts its boldness. The Japanese government will propose its budget for the next fiscal year 2018. What is the likely impact of this budget on the economy? The upshot is quite simple. Unlike the U.S. counterpart, Japan's budget is contractionary, and the tax reform is rather ti

Japan's Prime Minister and ruling Liberal Democratic Party leader Shinzo Abe puts rosettes by... [+] successful general election candidates' names on a board at the party headquarters in Tokyo on October 22, 2017. / AFP PHOTO / Toru YAMANAKA (Photo credit should read TORU YAMANAKA/AFP/Getty Images) Despite a flurry of speculation in the buildup to the election, there were few surprises come voting

Abe's announcement comes as tensions with North Korea are reaching a boiling point. He repeated what he said in his speech at the United Nations General Assembly on September 20,  calling North Korea's threats "real and present danger." He now advocates the "maximum" pressure on North Korea from "all means" -- including the international community -- to change its policy. The Prime Minister's toug

Also, it is less likely anything major will happen regarding North Korea before October when the Chinese Communist Party will hold its 19th Party Congress. This explains the timing. Economic consequences A snap election will have huge consequences on economic policy. The details of LDP’s election platform are not yet clear, but already the media is focusing on the scheduled consumption tax hike. A

Japan’s latest GDP figure is surprisingly good. According to the first preliminary quarterly estimates of GDP for April to June 2017, released on August 14, Japan’s real GDP is growing by annualized 4%. Also, its nominal GDP is growing by annualized 4.6%. The GDP deflator has picked up to 0.2%. And Japan's nominal GDP reached 545 trillion yen ($4.94 trillion USD) for first time in history. The med

Japan's Prime Minister Shinzo Abe bows to apologise for recent scandals during a press conference... [+] following his cabinet reshuffle at his official residence in Tokyo on August 3, 2017./ AFP PHOTO / Toshifumi KITAMURA (Photo credit should read TOSHIFUMI KITAMURA/AFP/Getty Images) Taking Stock of Abenomics On August 3, Japan’s Prime Minister Shizo Abe began reshuffling his cabinet, hoping to a

Goshi Kataoka starts serving as the member of the Monetary Policy Committee of the Bank of Japan on July 24. He is highly qualified for this job, but there is one thing I did not emphasize enough in my previous post; that is his youth. Kataoka is just 44 years old, very young by the Japanese standard. He has also lived and worked through the Lost Two Decades. When he entered the job market in 1996

There is only one valid definition of a business purpose: to create a customer. Peter Drucker, The Practice of Management “Imagine an NFL coach,” writes Roger Martin, Dean of the Rotman School of Management at the University of Toronto, in his important new book, Fixing the Game, “holding a press conference on Wednesday to announce that he predicts a win by 9 points on Sunday, and that bettors sho

Japanese Prime Minister Shinzo Abe’s approval numbers are plummeting. A poll conducted from June 17-18 by Asahi Shimbun, Japan’s second largest newspaper (by circulation), showed that only 41% of respondents support Abe’s administration, a six-point drop since May. Meanwhile, 37% do not support the administration, up six points over the same time frame. Other polls show a similar trend: Support fo

In 2002, he co-wrote a paper with the late Yasuhi Okada, a former student of Iwata and legendary business economist, and Adachi, who worked with Okada. Their paper, “The Regime Change in the Great Depression and the Showa Depression and Its Implications for Japan’s Contemporary Monetary Policy,” set the foundation of the reflation project in Japan. Their inspiration came from history. After all, n

Kiuchi and Sato are the last remaining MPC members who were appointed by the previous Democratic Party of Japan government. When they were appointed they were considered doves but they turned out to be vocal critics of the BOJ’s current expansionary policy. While these appointments surely strengthen the first arrow of Abenomics, the real question is what the Abe administration is going to do about

Although his work is mainly academic and very technical, he has become “hot” in Japan. The reason is quite simple. Koichi Hamada, professor emeritus of Yale University and one of the godfathers of Abenomics, drew attention to one paper Sims gave at the last year’s Jackson Hole Conference, a jamboree of central bankers held every Summer that is sponsored by St. Louis Federal Reserve Bank. Hamada ca

Recently, attacks on Abenomics have intensified. One impetus is recent remarks by Koichi Hamada, a former Yale University professor and one of the godfathers of Abenomics, when he said he recently changed his mind about the role of fiscal policy. Before, he thought monetary policy was powerful enough to defeat deflation, but now he believes fiscal policy should be stepped up to end deflation. Alth