Conventional wisdom regarding Japanese economy holds that it needs structural reform. That is correct, but news and opinion seem to focus too much on banking industry (e.g. writing off bad loans) and government sector reform (like postal savings). When we assess the current situation of Japan, we should focus more on what kind of reforms are needed for the corporate sector to become more efficient, and how much they have achieved in that context.

Actually, there have been a number of changes to promote healthy competition in corporate sector, and we will see much more in a few years. Such reforms will certainly be quite powerful to revitalize the economy, and realizing such reforms steadily is more important than just calling for inflation targeting policy or some other magic wands.