Will the 2020 Olympics in Tokyo help boost the Japanese yen and its economy? Seeing that they are currently struggling, I am curious if the Olympics is a big enough event to help propel the economy in the right direction.

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Of course, no one has a crystal ball good enough to determine the answer to this question.  Economists tend to disagree vigorously on the importance of events like the Olympic Games.  The games have actually ended up costing many cities money rather than helping their economies.  There is no way to know if this will end up being the case with Tokyo.

My own view is that the games will not be big enough.  I would also point out, however, that 2020 is rather a long time from now and, in the mean time, “Abenomics” might do a lot more to help the Japanese economy than the games ever could.  Abenomics is based on three “arrows.”  The first was quantitative easing meant to increase the money supply.  The second was a huge program of public spending based on running deficits.  The third, which has not yet been done, is a program of reforms to make Japan’s economy more flexible and competitive.

It seems likely that these reforms would be much more important to the Japanese economy than the Olympic Games possibly could be.  However, there is no way to know this for sure.

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