Japan Economy - 2204 Words

I. Introduction Japans exports rate last month at the fastest annual rate in more than two years. The weaker yen also boosted the energy heavy import bill, although the rose 10 per cent from a year earlier, economists said the net effect of the yens retreat remained positive, because higher export revenues translate into higher exporter earnings and consequently more investment and workers bonuses. Japan’s stock market is heavy on exporting, The Prime Minister Abes government also hopes that the export windfall will shore up general business and consumer confidence. This is way to aim to pull Japan out of its liquidity trap and end nearly two decades of economic stagnation and deflation. This essay will discuss about background and†¦show more content†¦III. Objectives and Effects of Weaker Yen The Prime Minister Abe tried to make lower currency of Yen with two strategies. First strategy is ‘Printing Money’ and second strategy is ‘Buying Yen from other countries’. Both of strategies increase supply of JPY. [pic] Weaker Yen sounds like loss of Japan. Actually, it brings a lot of benefits to Japan. There are many effects from weaker Yen. 3.1 Growth of Export Companies Japan’s fiscal policy is demand-pull for international consumers and Cost-Push for domestic consumers. DPJ (Democratic Party of Japan) thinks that cost-push inflation will increase the cost of goods and services however, having demand-pull is more important. It means growing demand will pull the economy into stability (J. Metcalfe, May 2013). Lower value Yen is same as income for household. It means an international consumer is able to buy Japanese products in lower cost. [pic] In Figure 3.1, previous currency of Yen was Y0 and after weaker Y1, it turned as income for international consumers. Thus, aggregate demand for Japanese products. Increased exporting will activate economy of Japan and there will be Inflationary gap between Y0 and Y1. It is enough to stimulate to recover Japanese economy. The Minister Abe thought weaker Yen will bring increase of export and demand for domestic products and services and it is true. The exporting rate of JapaneseShow MoreRelatedMonetary Policy Adopted On Bubble Economy Period Of Japanese Japan1331 Words   |  6 PagesThe topic of this dissertation is to discuss the monetary policy adopted in bubble economy period of Japanese. As Japanese economics is a specific example around the world. The Japanese government adopted many effective ways to revitalize the economy with the result that its economy rose abruptly after the World war II. 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