Paper short abstract:

In this paper, I argue that while Abenomics has yielded rich political dividends, its economic policies have been mired in ambiguity and fallen short of its stated objectives. I then examine and explain this discrepancy from a broad comparative historical framework.

Paper long abstract:

Is Japan back? With great fanfare, Abe Shinzo and the LDP surged back into the political spotlight by ousting the incumbent Democratic Party from power in December 2012. Under the banner of "Abenomics", his administration laid out a tripartite policy platform that promised to restore economic dynamism and end Japan's prolonged period of deflation. Over the following four years, Abe's cabinet approval rating has remained high, and the LDP's subsequent electoral victories in the 2013 Upper House and 2014 Lower House elections have insured that his party could pursue Abenomics unhampered by a "twisted" Diet. While these turn of events may suggest, as Abe proclaimed, that "Japan is back", there is considerable debate about what this return signifies, and whether Abenomics has delivered on its promises.

In this paper, I argue that while Abe's electoral victories represent the return of LDP dominance, the economic policies that the Abe administration has adopted have been mired in ambiguity and fallen far short of its stated objectives. In terms of the first two arrows of Abenomics, I demonstrate that there is a wide discrepancy between the Abe administration's stated claim of utilizing both fiscal and monetary policy to stimulate the economy, and the actual macroeconomic policies that it has adopted. While the government has indeed implemented a wide array of conventional and unconventional forms of expansionary monetary policies, the fiscal policy measures it has adopted have either fallen short of its stated claims, or even proven to be contractionary. Accordingly, while these measures, for the moment, may have helped to build up Japan's financial markets, its impact on the real economy has been weak. Moreover, from a broader comparative historical perspective, I further argue that Abenomics does not represent a bold departure from previous policies, but rather a continuation of a neoliberal trend that Japan has followed over the last three decades, and as such, it will continue to contribute to the growing level of social stratification and risk in Japan. In the concluding section of this paper, I seek to draw out the broader comparative and implications of these findings.