I am as curious as anyone in ascertaining the effects of Japanese Prime Minster Shinzo Abe's QE experiment. Miles Kimball points us here to an early assessment by Marcos Nunes, who writes:
Shinzo Abe was elected in December 2012 on a promise to revive growth and put an end to deflation. How have his promises ‘performed’ one year after taking power? The ‘performance’ will be illustrated by a set of charts.Nunes focuses on Japanese macroeconomic data beginning roughly with Abe's appointment as PM. But that's only about a year's worth of data. What I want to do here is compare these recent measurements with a longer sample, beginning in the year 2000 (the shaded region in my diagrams correspond to the Koizumi era, which I have written about before here).
First up is Japanese inflation (headline and core):
The evidence unfolding here really does seem to suggest that QE matters for inflation. My coauthor Li Li and I have recently remarked on this here. Next, let's look at NGDP and RGDP growth:
Well, you know...this does not look so great, does it? While it is true that both NGDP and RGDP are growing, similar growth experiences are evident even in the earlier deflationary periods. Sure, it's nice to see RGDP growth rising recently, but it's still far too early to tell whether it will be sustained. And in any case, note the relatively robust period of growth during the "Koizumi boom" period--an era of deflation and fiscal austerity.
The exchange rate and the stock market:
So the stock market was booming late in the Koizumi era, the exchange rate stable, and core inflation negative. What about trade patterns? Take a look here:
I'll let you make up your own mind. Now for some comparisons with the Eurozone. First, a comparison of broad money growth:
And finally, a comparison of RGDP growth rates:
So sure, the Eurozone is underperforming as of late, and prospects in Japan are looking relatively good. How good in Japan relative to the Koizuma era, I'm not sure. And how much of the recent Japanese performance can be attributed to QE, one can only speculate. All that I conclude from this data is that QE may be influencing the inflation rate and the exchange rate. But whether it is having a quantitatively significant impact on the real economy is far less certain.
A comment by Noah Smith below suggests that Japanese CPI and GDP deflator are behaving quite differently. This indeed appears to be the case.
So, since about the time of the Asian financial crisis, the relative prices of non-consumer goods and services has declined steadily.