By 1998, the Japanese government began to realise the errors of their ways and started to spend again, with the result that the economy began to grow (and the deficits came down as tax revenue increased) until the US recession in 2002 contributed to an export collapse. Once exports recovered and public spending support resumed, the economy then grew relatively strongly despite the lower sovereign debt ratings.
The same thing could happen today if Japan pursues a policy of growth, not fiscal consolidation. The bond buying program might be pleasing for the global stock market community, but it’s an irrelevance as far as Japan’s economy goes.Macrobits by Marshall Auerback
Why Should The BOJ’s ‘Shock And Awe’ Work Any Better This Time Around?
Marshall Auerback
