Historical note: cause of Japanese real estate bubble in 1980’s


“In the months following implementation of the Plaza Accord in 1985, Japan lowered interest rates and increased money supply. The reason? To reduce pressure for appreciation and mitigate its impacts. That approach, however, caused even more devastating consequence – a bubble, which eventually collapsed in 1989 (see Corbett and Ito 2010 and Ito 2010 on this site for more discussion).”


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