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Japan enacts new stimulus plan by €24 bn

MADRID | The Corner | The Japanese government approved last Saturday a new stimulus program to inject up to ¥3.5 billion (€23.8 billion or $29.1 billion), which will help the less developed regions of Japan and the households with subsidies, vouchers for goods and other similar measures. The government of Japan expect this new stimuli plan to boost the GDP by 0.7%. Despite the many critics to the so-called Abenomics program, the measures are still on-going as the advisor to the new government William H. Saito explained in an interview for The Corner.

“People forget that QE is a Japanese innovation”

MADRID | By Ana Fuentes | In a blow to PM Shinzo Abe, the Japanese inflation rate fell to its lowest level in over a year in November (0.7% from a 0.9% rise the previous month, according to government data released Friday), complicating efforts of the central bank to end more than a decade of chronic price falls. Does this mean, as stimulus sceptics put it, that the Abenomics are doomed? Advisor to the new government and one of the 100 Most Influential People for Japan according to Nikkei Business, William H. Saito believes we have been quick to judge their strategy. As he explained to me, they have “many plan B’s left.”


Japanese economy: short-term gain, long term pain?

MADRID | By Luis Arroyo | When many were speaking of a new Japanese recession and the failure of Shinzo Abe’s bold Keynesian policy, his Liberal Democrat Party obtained a sweeping victory at the polls on Sunday. In Europe, the Abenomics are in austerity fans’ crosshairs because if these policies happen to work they would look ridiculous. They were delighted when Japan’s GDP contracted in 3Q. But I’ve been following the Nippon economy for some time and I don’t really rust quarterly figures.

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Abenomics: “Third arrow” as a necessary condition for trickle-down effects

LONDON | Barclays analysts | The post-election challenge for Abenomics will be how to promote a transition from a favourable turn in expectations to the real economy (real GDP). For example, JPY depreciation has boosted earnings and led to an improvement in business sentiment (expectations), but export volume remains sluggish, suggesting it has not given a boost to the real economy (real GDP). 

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Japan falls into technical recession

MADRID | The Corner | The Japanese economy unexpectedly entered recession in the third quarter, just after the GDP decreased by an annualised pace of 1.6 per cent, versus forecasts that it would rebound by 2.2 per cent. Japan contracted by 0.4% in the 3Q14, leaving the country in a technical recession, which drove the Nikkei to near 3% losses and raised serious questions about the planned sales tax hike next year.

Elevator QE

SAO PAULO | Marcus Nune’s Historinhas- Guest Post by Benjamin Cole | If you ever farted loudly on a crowded elevator, then you know the reaction of most economists to the idea that national debts should be monetized through central bank quantitative easing (QE), aka “printing money.”

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Japan’s “growth strategy”

LONDON | By Kyohei Morita and Yuichiro Nagai at Barclays | The Abe administration is currently aiming to reach a Cabinet decision on its new growth strategy and “big bone” economic and fiscal reform plans around end-June. The discussions are far-reaching, but from the perspective of market participants, we believe there are four near-term focal points: 1) corporate taxes; 2) labor market reforms; 3) reforms to the pension system, including the Government Pension Investment Fund (GPIF); and 4) special national strategy zones. Here we focus on corporate taxes, likely the only subject of concrete discussion for the markets in June.

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Money is not long-run neutral or is the CFS’s “divisia” right?

SAO PAULO | By Benjamin Cole via Marcus Nunes’ Historinhas | One of the bromides of modern macroeconomics is that “long-term, money is neutral.” The above maxim makes sense on some levels. A nation is made rich or poor by its investment in infrastructure, education, farmland, factories, work ethics and the like. Running printing presses, per se, is meaningless.