Adam Posen, president of the Peterson Institute for International Economics in the United States, called on Japan on Monday to be more ambitious in structural reform such as raising the participation of women in the workforce, after making progress in monetary and fiscal policies.
The government of Prime Minister Shinzo Abe has been successful in the first and second arrows of economic policies dubbed "Abenomics" -- drastic monetary easing and massive fiscal spending -- but it has been "insufficiently ambitious" in structural reform, the third arrow, he said.
"The direction is right, but the government, in my opinion, should be more ambitious in going in this direction," Posen said in a speech in Tokyo, arguing it should also take a more aggressive approach to reforming the farm sector, improving labor market conditions and seeking more competitive health care services.
To increase female workers in Japan, where the rate of their participation is low though they are as equally educated as men, the government should step up efforts to raise the ratio of women in leadership positions, as their participation could help resolve the country's aging and fiscal problems, Posen said.
As for the labor market, the government needs "much more aggressive intervention" to remove barriers between regular and temporary workers, such as giving subsidies or tax breaks to companies to hire younger and less experienced workers, he said.
In praising Abe's economic policies, Posen said the government so far has made "extremely good progress" just about one year after Abenomics was announced and less than a year since Haruhiko Kuroda became governor of the Bank of Japan.
Countering the view that drastic monetary easing is about driving down currencies, Posen said quantitative easing in large economies is primarily for "domestic prices and domestic expectations," although it has been helpful to exporters to some extent.