"It seems to me that one of the
automatic, if not always intended, consequences of Abenomics is to force up
Japan’s current account surplus, and in fact to force it up substantially. This
will have to do at least in part with deciding how to manage the country’s
enormous government debt burden, which easily exceeds 200% of the country’s GDP."
"Second, it is not obvious
that the world will be able to absorb a significant increase in the Japanese
exports, and if Abenomics implicitly forces up the Japanese savings rate
relative to investment (which is all that we mean when we say that economic
policies force up current account surpluses), these policies can resolve
themselves either in the form of high growth and soaring exports, or much lower
growth and slowing imports. The former implies that Abenomics will be
successful, while the latter that it will fail. It is not obvious, in other
words, that Abenomics can succeed in a world of weak demand, and its failure is
likely to make Japan’s domestic imbalances worse, not better."
