Question

Shinzo Abe is the current Prime Minister of Japan. He has advocated a number of significant economic reforms since he became Prime Minister in 2012. One of these reforms involves the use of expansionary monetary policy, which the central bank of Japan has actively followed. The U.S. Treasury, however, has criticized so-called Abenomics, arguing that its monetary policy constitutes a “beggar-thy-neighbor” policy and that it unfairly discriminates economically against the United States. Do you agree or disagree with the U.S. Department of Treasury and why?

Answer 1

I agree.

Beggar thy neighbor means increasing the economy at the cost of the other competing nations in the world. With an expansionary monetary policy, the Japanese will lose its value and start depreciating. This will make the exports very much cheaper for the Japanese firms.

At a lower cost, the Japanese exports will take away the market of the US firms putting the burden on them and reducing their demand. This will force the US firms to use similar policy or lose the market.