Paper short abstract:

For 15 years the Bank of Japan has been consistently failing in its attempts to re-inflate the economy. The failure originates from the misunderstanding the nature of inflation and the original reasons of deflation. Only coordination of structural and monetary policy may succeed.

Paper long abstract:

Since the beginning of the century the Bank of Japan has been consistently failing to achieve its inflation target simply by printing money. I argue that it happens because the BoJ has ignored the nature of inflation itself. In Cagan (1956) framework the price level today is a function of a today's money supply and public expectations of what will be the price level in a future. It is hard to expect that, after having lived for more than two decades with zero and negative inflation rates, the Japanese public will change its expectations on inflation easily. In addition to the expectations, already in 1960, Samuelson and Solow distinguished between demand-pulled and cost-pushed inflation; yet another concept seemingly ignored by the proponents of printing money. Second, some of the Abenomics fiscal and social policies have been contradicting the re-inflating attempts by the Bank of Japan. Here especially switching the burden of country's fiscal spending from big companies to individual consumers with virtually no trickling-down effects has worked effectively towards reducing domestic demand. Third, there has been no attempt of thorough discussion about the factors that triggered deflation in first place. Has it began because of the consumption tax? Ageing society and collapse of the pension system? Collapse of the traditional employment system? Putting the end to deflation is impossible without answering these questions.

As for the title question. It is not economic theory to blame, it is rather politicians who prefer listening to the intellectually easiest advice. The conclusion applies not only to the BoJ and the current Japanese political establishment but unfortunately also to its European and, to some extent, also American counterparts.