M-RCBG Senior Fellow-Led Study Group: Paul Sheard

DATE: March 3, 4:00-5:30 M-RCBG Conference Room, B-503

When Shinzo Abe became Japan’s prime minister for the second time in December 2012, he captured the attention of the country and the world by launching “Abenomics,” a three-pronged economic program aimed at ending deflation and kickstarting growth in what was widely perceived as a moribund economy. The three “arrows” of Abenomics were: aggressive monetary policy easing under the leadership of the governor of the Bank of Japan installed by PM Abe, Haruhiko Kuroda; “flexible” fiscal policy management; and a comprehensive growth strategy involving policies to promote innovation, to encourage more women to enter the workforce, to reform corporate governance, to allow more foreign workers into the country, and more.

What is the right way to think about Abenomics in economic policy terms? After seven years, to what extent has Abenomics worked?; what has worked and not worked, and why? 

During the tenure of PM Abe, the consumption tax rate has been doubled, in two stages, from 5% to 10%, and the Bank of Japan has had to take progressively more and more aggressive and radical monetary policy actions, culminating (from September 2016) in its targeting 10-year JGB yields at around zero percent and committing to continue to expand the monetary base until CPI inflation is firmly above 2%. 

Is there another way to tell the Abenomics story? Was Abenomics just a brilliant political marketing ploy and a “Trojan Horse” to allow the powerful fiscal hawks in Japan to pursue fiscal consolidation under the cover of the BOJ’s dramatic monetary policy easing? 

This Study Group will cast light on these and related questions, drawing on Paul Sheard’s four decades of experience analyzing the Japanese economy as an academic researcher and financial markets economist.  

Background reading:
Paul Sheard, 2013: “All You Need To Know About ‘Abenomics,’” Standard & Poor’s Ratings Services RatingsDirect, June 12, 13pp

Paul Sheard, 2013: “The Bull’s-Eye Of The Third Arrow Of Abenomics,” Standard & Poor’s Ratings Services RatingsDirect, November 8, 11pp

Paul Sheard, 2013: “Change Of The Guard--And The Deflation Storyline--At The Bank of Japan,” Standard & Poor’s Ratings Services RatingsDirect, March 28, 12pp

Study Group Handout

Photo of Paul Sheard speakingPaul Sheard is a veteran central bank watcher and markets economist, who has written and spoken widely on QE and unconventional monetary policies. He most recently was Vice Chairman of S&P Global, after serving as Executive Vice President and Chief Economist and earlier Executive Managing Director and Chief Economist of Standard & Poor’s Ratings Services. Previously, he held chief economist positions at Nomura Securities and at Lehman Brothers and was Head of Japan Equity Investments at Baring Asset Management. Earlier, Sheard was Lecturer in Economics at the Australian National University (ANU) and Osaka Gas International Cooperation Associate Professor of Economics at Osaka University, and was Visiting Scholar and Visiting Assistant Professor of Economics at Stanford University and Foreign Visiting Scholar at the Bank of Japan. Sheard is a member of the World Economic Forum’s Global Future Council on the New Economic Agenda and was a member of the WEF’s Global Agenda Council on the International Monetary System (2010-2012). He served on committees of the Japanese Government’s Economic Deliberation Council, as an appointee of Prime Minister Ryutaro Hashimoto (1997-98) and as an appointee of Prime Minister Keizo Obuchi (1998-1999), and was a member of the oversight board of the Japanese Government’s Research Institute of Economy, Trade and Industry (2001-2006).  From 2003 to 2010, he was a non-executive director of ORIX Corporation. In 2006, Sheard was recognized by Advance as one of a 100 Leading Global Australians. Sheard is on the board of the Foreign Policy Association and is a member of the Bretton Woods Committee, the Council on Foreign Relations, and the Economic Club of New York. He speaks regularly at conferences around the world, and his views on the global economy and policy issues are frequently cited in the international press. Author or editor of four books and numerous academic articles, Sheard’s 1997 book in Japanese, Mein Banku Shihon Shugi no Kiki: Biggu Ban de Kawaru Nihongata Keiei (The Crisis of Main Bank Capitalism: How Japanese-style Management Will Change with “Big Bang”), won the Suntory-Gakugei Prize in the Economics–Politics Division. Sheard received a BA (Hons) from Monash University and a Master of Economics and PhD in Japanese Economy from the ANU. While a Senior Fellow, he will work on a project called, “Rethinking and Retooling the Macroeconomic Policy Framework.” His faculty sponsor is Jason Furman, Professor of the Practice of Economic Policy.  Email: paul_sheard@hks.harvard.edu