As the exchange rate moved to a floating exchange rate and the exchange rate fluctuated erratically in a short period of time, the importance of cooperative management of exchange rates by developed countries began to be recognized.
1980 In the generations, Japan became the world's largest trade surplus country due to the rapid increase in exports to the United States.
After the rationalization of management and the transformation of the industrial structure, Japan has strengthened its international competitiveness, and has made fierce exports to Western countries, and trade friction has become more serious.
Plaza Accord
President Reagan, who became president of the United States in 1981, sought to strengthen the economic and military power of the United States. Unlike previous policies, [ small government Reagan, who insisted on [ Reaganomics , reduced government spending, drastically reduced taxes, and deregulated. ] Is called.
However, the increase in military spending widened the budget deficit, and the United States adopted a high interest rate policy, which led to a stronger dollar and weakened the export competitiveness of the United States. In the United States in the 1980s, the budget deficit and the current account deficit progress at the same time [ twin deficits ] Will be annoyed and will turn to protectionist tendencies.
1985 Developed countries, who felt a crisis in protectionist tendencies, held a conference.
G5 ( Developed Country Finance Ministers and Central Bank Governors Meeting ) Was opened, Japan / US / UK / France / West Germany Is a Plaza Hotel in New York Gathered at.
The agenda of this meeting agrees that the monetary authorities of Japan, the United States and Germany will intervene in selling the dollar in the correction of the strong dollar.
This is called the Plaza Accord.
As a result, the dollar depreciated sharply, and 1 dollar =240 yen The exchange rate was $ 1 =¥ 120 It became up to. During this period, Japanese companies actively acquired American companies and real estate, and Japan's direct investment was a huge amount until 1999.
The Japanese economy, which had been growing led by exports due to the sharp appreciation of the yen, was 1986 . Yen appreciation recession Fall into.
Some Japanese companies moved their production bases to East Asia, where labor is cheap, in order to avoid the effects of the strong yen, and promoted local production to avoid trade friction. This has weakened the domestic manufacturing industry.
Japan's trade structure has entered a period of major change due to the increase in product imports in place of energy and raw materials, especially the increase in cheap product imports from Asia.
At that time, the Japanese government turned to a domestic demand-led economy, aiming to expand public works projects, expand imports, and reduce the trade surplus, in line with the policy of expanding domestic demand.
In 1987, the G7 including Italy and Canada was opened in France, and the G5 countries decided to reduce the cooperative interest rate of trade surplus countries and raise the interest rate of the United States, and the Louvre Accord was made to stop the depreciation of the dollar.
The Bank of Japan has embarked on a monetary easing policy and lowered the official discount rate to a record high of 2.5% in 1987. In this way, the exchange rate stabilizes, and the surplus funds generated by this stabilize toward stocks and land speculation, leading to a domestic demand-led bubble economy (1987-1991) . The booming economy has begun.
Bubble economy
1986-1991 Japan is a bubble economy The booming economy called was continued.
A bubble economy is an economic situation in which the economy swells like a bubble more than it can.
Land in Japan has risen to a price far from its original value, and the value of assets owned by individuals and companies has increased. People all bought luxury brands, luxury cars, golf memberships, paintings and resort condominiums.
However, wholesale prices and consumer prices were stable because the prices of imported goods had fallen due to the appreciation of the yen.
Easy flow to bubble
US trade deficit increases
↓
1985 Plaza Accord
↓
Yen appreciation recession
↓
Low interest rate policy (monetary easing policy) drastically reduce the official discount rate
↓
Easy to get money and invest in land and stocks
↓
To the bubble economy
The collapse of the bubble economy
Bubbles will eventually burst, and the time will come when the bubble economy will burst.
Real estate loan total amount regulation And Gulf War The Bank of Japan, worried about inflation due to the rise in imported crude oil prices, has raised the official discount rate . I did.
As a result, fewer people borrow money from banks to buy land and stocks, stock prices fall and land prices fall . Will be born.
February 1990 Stock prices fell in March 1991 Land prices will also fall after that.
Once the stock goes down, many people start to think that they will lose money, and those who are worried will sell the stock early. As a result, we fall into a negative spiral of further stock price declines.
Finally bubble burst Happened.
December 1989-August 1992 Stock price decline rate Reached up to 63.3%.
1991-October 1993 The recession caused by the bursting of the bubble continued until then, but the real economic growth rate did not turn negative.
Flow of bubble burst
Bubble economy 1986-1991
↓
Real estate loan total amount regulation
Increase the official discount rate
Introduction of land value tax
↓
It's hard to get money,
People who buy land and stocks
Decrease (decrease in land prices and stock prices)
↓
To burst the bubble ...
In this way, the unprecedented booming bubble economy is over, and Japan is entering an era called the Heisei recession.