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Even as Europe fell deeper into what just became its longest recession since World War II, Japan posted an unexpectedly robust growth rate of 3.5 percent under the bold new stimulus measures championed by Prime Minister Shinzo Abe — precisely the medicine many have urged European leaders to take.
“The elites in Europe don’t learn,” said Stephan Schulmeister, an economist with the Austrian Institute of Economic Research. “Instead of saying, ‘Something goes wrong, we have to reconsider or find a different navigation map, change course,’ instead what happens is more of the same.”
He added, “Angela Merkel is not willing to learn from the Japanese experience,” referring to the German chancellor.
Since taking office in December, Mr. Abe has pushed a three-pronged program — called the three-arrowed approach in Japan — to end two decades of stagnation in the Japanese economy. It involves a strongly expansionary monetary policy, increased fiscal spending and structural changes to improve competitiveness; the first-quarter growth spurt suggests that his approach is already paying off.
Not only have exports improved, the logical outgrowth of a weaker currency, but consumer sentiment and household consumption also have risen. “The real economy is responding,” said Adam S. Posen, president of the Peterson Institute for International Economics in Washington. “The last five months, six months, there’s been a mini consumer boom. All the things that people said could never happen in Japan have turned around.”
He added: “Japan’s central bank is supporting recovery, and it’s working. The European Central Bank is supporting stagnation, and it’s working.”
http://www.nytimes.com/2013/05/17/world/europe/japan-courts-growth-while-europe-keeps-up-austerity.html?pagewanted=1&_r=0&ref=world
Imagine that ...
... expansionary policy is expansionary and contractionary policy is contractionary.
Whoda thunkit?
“The elites in Europe don’t learn,” said Stephan Schulmeister, an economist with the Austrian Institute of Economic Research. “Instead of saying, ‘Something goes wrong, we have to reconsider or find a different navigation map, change course,’ instead what happens is more of the same.”
He added, “Angela Merkel is not willing to learn from the Japanese experience,” referring to the German chancellor.
Since taking office in December, Mr. Abe has pushed a three-pronged program — called the three-arrowed approach in Japan — to end two decades of stagnation in the Japanese economy. It involves a strongly expansionary monetary policy, increased fiscal spending and structural changes to improve competitiveness; the first-quarter growth spurt suggests that his approach is already paying off.
Not only have exports improved, the logical outgrowth of a weaker currency, but consumer sentiment and household consumption also have risen. “The real economy is responding,” said Adam S. Posen, president of the Peterson Institute for International Economics in Washington. “The last five months, six months, there’s been a mini consumer boom. All the things that people said could never happen in Japan have turned around.”
He added: “Japan’s central bank is supporting recovery, and it’s working. The European Central Bank is supporting stagnation, and it’s working.”
http://www.nytimes.com/2013/05/17/world/europe/japan-courts-growth-while-europe-keeps-up-austerity.html?pagewanted=1&_r=0&ref=world
Imagine that ...
... expansionary policy is expansionary and contractionary policy is contractionary.
Whoda thunkit?
