Professor, International and Public Affairs
Title: Abenomics: Japan's Escape from its Lost Two Decades
Abstract: Japan experienced two decades of low growth and deflation during 1992-2012. This lecture describes and analyzes how Japan exited its Lost Two Decades (1992-2012). How did Japan fall into two decades of stagnation and fifteen years of deflation? How has Abenomics, the economic policy package introduced in December 2012, lifted the economy out of stagnation and deflation? What challenges remain? What lessons can the U.S. and other advanced economies learn from Japan?
Japan’s "Lost Two Decades" (1992-2012) is a result of internal shocks (bubble burst), external shocks (global financial crisis), and a series of policy errors. Shinzo Abe, inaugurating his second premiership in December 2012, introduced a package of economic policies consisting of aggressive monetary policy, flexible fiscal policy, and structural reforms as a growth strategy. His policy package was dubbed Abenomics and its three principal polices Three Arrows. Abenomics has worked to lift the economy out of stagnation and deflation. By the end of 2018, the Japanese economy was keeping up at its potential growth rate with wide-spread labor shortages and a strictly positive inflation rate. However, the potential growth rate itself still remains low and real wages have hardly risen. The 2% inflation target has not yet been achieved since Governor Kuroda, Bank of Japan, introduced quantitative and qualitative easing (QQE) 6 years ago. In order to raise and sustain the potential growth rate and real wages, Japan needs to (1) overcome the declining working age population; (2) raise labor productivity by innovation; (3) encourage formation of new corporations; and (4) regain fiscal disciplines.
This lecture is based on Chapter 14: Lost Two Decades in Japanese Economy, 2nd edition, MIT Press, forthcoming (2020), by Takatoshi Ito and Takeo Hoshi.
Takatoshi Ito is Professor of International and Public Affairs at Columbia University. He is Director of the Program on Public Pension and Sovereign Funds at the Center on Japanese Economy and Business at Columbia School of Business, and is also Senior Professor (in summer) at National Graduate Institute of Policy Studies in Tokyo. Before Columbia, he was at U. of Minnesota, Hitotsubashi U., and U. of Tokyo. He was also Dean of Graduate School of Public Policy at University of Tokyo.
Since his Ph.D. in economics from Harvard University (1979), Ito has authored/coauthored a dozen monographs, edited/coedited 30 books, and published numerous articles in academic research journals including American Economic Review, Econometrica, Journal of Economic Theory and Journal of International Economics. His research themes have been wide ranging from the theories of general economic equilibrium/disequilibrium to empirical and policy analysis of exchange rate dynamics, macro-monetary economics, public finance and international finance. His service to the economics profession has included the editorship of the Journal of the Japanese and International Economies and Asian Economic Policy Review as well as associate editorships of several other journals. He is a Fellow of Econometric Society and a Past President of Japanese Economic Association.
Ito has been affiliated with major economic research centers in Tokyo, London, and Cambridge, MA. He has been prolific in his role as senior research-cum-policy advisor to both international agencies and the Japanese government. He has been a senior advisor to the Japanese Prime Minister’s Council (内閣府経済財政諮問会議議員), Japanese Ministry of Finance (大蔵省大臣官房参事官・財務省関税為替等審議会会長), and International Monetary Fund. In 2011 the Japanese Government awarded him a Purple Ribbon National Medal (紫綬褒章) for his distinction in professional and academic achievement.
Free and open to the public
This event is supported by a U.S. Department of Education Title VI grant to The Ohio State University East Asian Studies Center, the Brad Richardson Memorial Fund, and the Japan Ministry of Foreign Affairs through the Consulate General of Japan in Detroit.