ECONOMISTS STILL puzzle over Abenomics, the experimental mix of policies introduced by Japan’s prime minister, Abe Shinzo, seven years ago, in an effort to ward off the country’s deflation and stagnation. But two lessons are clear. Japan’s bond market is remarkably docile. And its households are painfully sensitive to increases in the consumption tax, a broad value-added tax imposed on many of their purchases. After the government raised the tax from 8% to 10% on October 1st, the economy shrank at an annual pace of 6.3% in the fourth quarter of 2019, according to figures released on February 17th (see chart).
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