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Despite nearly three decades of government budget deficits, Japan has stagnated with an average real GDP growth rate of 1%, interspersed with recurring ‘technical’ recessions. Indeed, Japan’s fastest growth period was from 2002-2007, when austerity was imposed by Koizumi!
So history does not support the Keynesian policy solution. Moreover, it does not augur well for the policy conclusions of Modern Monetary Theory (MMT). MMT exponents argue that governments should run ‘permanent’ budget deficits to boost government spending to the point where ‘full employment’ is achieved. There would be no need to worry about the size of government debt because a country like Japan, which services that debt from Japanese citizens’ savings through the banks buying government bonds, will never default.
full: https://thenextrecession.wordpress.com/2020/02/19/japan-abenomics-revisited/
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