国际金融作业——安倍经济学.doc

During theglobal economic recession, Japan suffered a 0.7% loss inreal GDPin 2008 followed by a severe 5.2% loss in 2009. In contrast, the data for world real GDP growth was a 3.1% hike in 2008 followed by a 0.7% loss in 2009.As well, exports from Japan shrunk from 746.5 billion in U.S. dollars to 545.3 billion in U.S. dollars from 2008 to 2009, a 27% reduction. Abenomics is a set of policy measures meant to resolve Japans macroeconomic problems. It consists ofmonetary policy,fiscal policy, andeconomic growthstrategies to encourage privateinvestment. Specific policies includeinflation targetingat a 2% annual rate, correction of the excessive yenappreciation, settingnegative interest rates, radicalquantitative easing, expansion ofpublic investment,buying operationsof constructionbondsbyBank of Japan(BOJ), and revision of the Bank of Japan Act.Fiscal spending will increase by 2% ofGDP, likely raising the deficit to 11.5% of GDP for 2013.In 2012, the Nationalpassed the bill to increase the consumption tax rate to 8% in 2014 and 10% in 2015to balance the national budget, and it is expected that the tax hike will discourage consumption. In 1997 the consumption tax was increased from 3% to 5%, and then deflation started; the nominal GDP growth rate was below zero for most of the 5 years after the tax hike. As of May 2013, it has achieved the depreciation of the yen to 102 yen to a dollar, which was stagnating around 80 in 2012. Also, according to a survey carried out by Nikkei Newspaper in Japan, 74% of the respondents praised the policy in alleviating Japan from the prolonged recession. In terms of recent economic trends, theunemployment rateof Japan has decreased from 4.0% in the final quarter of 2012 to 3.7% in the first quarter of 2013, continuing a past trend. Abenomics refers to the economic policies advocated by Shinz Abe, the current Prime Minister of Japanwho assumed office on 26 December 2012. Its refers Abe proposed a series of economic policies, currency devaluation as the main body. Abenomics Japanese name is made from the word of Abe and economics, which term has been widely used since November 2012.The new Cabinet headed by Shinzo Abe, president of the Liberal Democratic Party, which won a crushing victory in the general election, came into office on December 26 of last year. During his election campaign, Mr. Abe advocated an economic policy for breaking away from deflation that is completely different from previous ones. In response to Mr. Abes pronouncements, the yen depreciated, and stock prices rose. It targets a 2% inflation rate, the creation of 600,000 new jobs in two years and a stimulus package valued at ￥20.2 trillion or $210 billion.Since his election campaign, Prime Minister Abe has advocated a three-pronged macroeconomic policy consisting of bold monetary easing, flexible fiscal policy, and a growth strategy. The three pillars of the policy can be described as follows:(1) An inflation target to be set by the Bank of Japan, additional quantitative easing, and the launch of a fund to buy foreign government bonds.(2) Increases in public investments for the long term under a national land strengthening plan, and the compilation of a large supplementary budget as the first step.(3) A growth strategy to enhance the competitiveness of business locations in Japan in terms of taxation and regulations.With regards to the first pillar, at a Monetary Policy Meeting held on January 22, the Bank of Japan set an inflation target of 2% and brought in an open-ended asset purchasing method. On the same day, the government and the Bank of Japan announced a joint statement regarding overcoming deflation and achieving sustainable economic growth, which indicated the Bank of Japans stance of increased cooperation with the government to overcome deflation. With regards to the second pillar, since his election campaign Mr. Abe has advocated 200 trillion yen worth of public works projects over 10 years under what he calls a “national land strengthening plan.” On January 15 the Abe Cabinet approved a supplementary budget for FY2012 of 13.1 trillion yen, the second largest supplementary budget in history, to boost the economy in the current fiscal year and the next fiscal year. Mr. Abes economic policies, which have been dubbed “Abenomics,” appeared to focus on making the Bank of Japan set an inflation target to overcome deflation. Mr. Abe even suggested that he has considered revising the Bank of Japans Law. Next, using AADD curve analysis, Mr. Abe may produce the effect of the policy of economics1. Effects of a Temporary Increase in the Money SupplyBy shifting AA1 upward, a temporary increase in the money supply causes currency depreciation and a rise in output.An increase in the level of money lowers interest rates, causing the domestic currency to depreciate (a rise in E). The AA shifts up (right). Domestic products are cheaper so that aggregate demand and output increase until new short run equilibrium is achieved.So It not only can increase the output of Japan, still can make the yen devaluation.2. Effects of a Temporary Fiscal ExpansionBy shifting DD1 to the right, a temporary fiscal expansion causes a currency appreciation and a rise in output.An increase in government purchases or a decrease in taxes increases aggregate demand and output. The DD curve shifts right. Higher output increases real money demand, thereby increasing interest rates, causing the domestic currency to appreciate So it can increase the output of Japan, but will continue to rise in the yen.3. Effects of a Permanent Fiscal ExpansionBecause a permanent fiscal expansion changes rate expectations, it shifts AA1 leftward as it shifts DD1 to the right. The effect on output is nil if the economy starts in long-run equilibrium. A comparable temporary fiscal expansion, in contrast, would leave the economy at point 3.A permanent fiscal expansion not only has an immediate impact in the output market but also affects the asset markets through its impact on long-run exchange rate expectations.A permanent increase in government purchases or reduction in taxes increases aggregate demand makes people expect a domestic currency appreciation in the short run due to increased aggregate demand, thereby reducing the expected return on foreign currency deposits, making the domestic currency appreciate.The first effect increases aggregate demand for domestic products, the second effect decreases aggregate demand for domestic products (by making them more expensive).So it can make the yen depreciate, but there wont be effect on output.4. Short-Run Effect of a Permanent Increase in the Money SupplyA permanent increase in the money supply has stronger effects on the exchange rate and output than an equal temporary increase. A permanent increase in the level of the money supply Lowers interest rates； Makes people expect a future depreciation of the domestic currency, increasing the expected return of foreign currency deposits. The domestic currency depreciates more than (E rises more than) the case when expectations are constant The AA curve shifts up (right) more than the case when expectations are held constant.So it can make Japan in exchange rate and output two aspects have been improved greatly.5. Long-Run Adjustment to a Permanent Increase in the Money SupplyThe final analysis conclusion，a Permanent Increase in the Money Supply in long-run can make the yen depreciate, but weaker than the short-run effect. And it has no effect on output.From the current view, Abe has both positive effect in economics, also produced many negative effects.Positive effects:From the latest data released by the economics Abe of Japans economy to boost the effect was immediate. On June 10, according to data released by the cabinet office in the first quarter gross domestic product (GDP) growing at an annual rate of 4.1%, higher than previous preliminary forecast of 3.5%.Other major economic indicators also look very beautiful: may GongKuangYe production index rose by 0.2% in Japan, for the continuous4 months; Retail sales increased 0.8% year-on-year, it is the first five months year-on-year growth; Compared with the new residential quantity Increased by 14.5%, for nine consecutive months of growth.On July 1, the bank of Japan enterprise short-term economic observation survey released (boj tankan), according to Japanese manufacturing big business confidence index in June 12 points higher than the previous survey, is also the first time since September 2011 comes as.The international monetary fund (IMF) in the economic outlook report released on April, Japans economic growth rate rise to 1.6%.But not long ago, Japan center for economic research predicts that Japans GDP growth is expected to reach 2.6% for 2013.So far, Abe economics is the most intuitive effect is reflected in the substantial depreciation of the yen and the stock market rose sharply.Since Mr Abe came to power in December last year, the yen rate more than 20%, the stock market rose about 70%.Japans exports increased 10.1% year-on-year in May. The yen and a surging stock market value for the Japanese corporate earnings boost effect is obvious, the Tokyo stock exchange listed companies released a plate on fiscal earnings, raised more than seventy percent enterprises operating profits. Benefit from improving, the yen and the American marketNegative effects:First of all, the ultra-loose monetary policy contributed to the market volatility. On May 23, Tokyos Nikkei stock index tumbled over thousand points, opened the prelude of the Japanese stock market continuous ups and downs; The bank of Japan through a large number of long-term bond yields expected to buy Treasury bonds down; The yen has obviously mainly by the federal reserve central bank policy and overseas investor psychology influence overseas.Second, economics Abe failed to benefit the small