Abstract: Currently, Japan’s national debt has topped 1 quadrillion yen. Fiscal deficit-to-GDP ratio has reached 9.0% and debt-to-GDP ratio was 224.3%, both were beyond the international security line of 3% and 60% accordingly. Abe proposed a plan to rejuvenate Japanese economy after he took office, then the international society focused on whether his plan would be successful or not. Based on revealing the reasons why Japan avoided debt crisis while its debt rating was demoted twice, by analyzing potential risks of Japanese sovereign debt crisis, this paper concludes that Abe’s “three arrows” which are aggressive monetary policy, flexible fiscal policy and growth strategy that promotes private investment boosted the confidence of Japanese economy in short term. However, without thorough structural reform which could lead Japan out of 20-years’ stagflation and into economic growth, Quantitative and Qualitative Monetary Easing might trigger Japanese debt crisis.
Keywords: Sovereign Debt, the Myth of Japanese Public Debt, Abenomics
source:Finance & Trade Economics ,No10,2013