From the news:
Japanese Prime Minister Shinzo Abe said Thursday that he would seek to expand the nation’s economy by around a fifth, pivoting away from a month’s long fight over security legislation that hurt his popularity among voters.
“Creating a strong economy will continue to be my top priority,” Mr. Abe said during a news conference at the headquarters of the ruling Liberal Democratic Party, where he was officially appointed to another three-year term as party leader.
Mr. Abe said he would aim at increasing the size of Japan’s economy to ¥600 trillion ($5 trillion), from around ¥490 trillion in the latest fiscal year. He didn’t say exactly how or when that growth would be achieved.
As the chart shows, nominal spending in Japan has remained bottled-up for more than twenty years. The 2008 crisis depressed it further. It is also clear in the chart that Abenomics, introduced when Abe assumed the premiership in December 2012, has helped lift-up the economy, but certainly not enough to “crank” the growth engine.
Market Monetarists have for long proposed that central banks, instead of targeting inflation should establish a level target for nominal spending, or NGDP. Abe has “broken the spell”, but to be successful he has to do it right. And that means providing an estimated time of arrival (ETA) at the new target. If that is specified, the route becomes known and that provides the best guidance for all types of economic agents, allowing the Bank of Japan to closely monitor the process and enabling it to undertake timely corrective measures, i.e. quickly reset the “rudder” as soon as deviations from the path are identified.