With Japan's economy struggling to escape its deflationary torpor, the economic-revitalization plan that Prime Minister Shinzo Abe launched in 2012 has come under growing scrutiny. But Japan's current travails, which have brought a concomitant decline in Japan's stock market, stem from the yen's appreciation — 24 percent over the last year — against major currencies. Abenomics — which included substantial monetary and fiscal expansion — has nothing to do with it.
Since Abenomics was introduced, Japan's labor market has improved considerably: 1.5 million new jobs have been created, and the unemployment rate has fallen to just over 3 percent . Moreover, corporate profits have soared, and tax revenues have increased by more than ¥20 trillion.
To build on these gains, Japan has promised a large fiscal expansion next month, which some describe as a piecemeal, temporary version of "helicopter drops" (permanent monetization of government debt). But there is concern that it will not be enough, if the yen continues to appreciate.