Japan's Lost Thirty Years: From Post-War Miracle to Bursting Bubble

Japan has achieved remarkable economic success since the 1950s, and there are consequences when Japan grows too fast, even up to a certain point. The signing of the Plaza Accord was the decisive factor in determining Japan's future economic destiny, but the Japanese at that time only focused on the growth of the exchange rate and ignored their own policy mistakes. The Japanese government even thought it was a "godsend" at one time that year, and the yen's exchange rate began to be seriously overvalued. At the same time, this also led to Japan's industrial hollowing out. Here, it could be argued that Japan signed the agreement in the mistaken belief that the economy would be great in the future. Therefore, this paper discusses whether the Plaza Accord was a determinant of Japan's economic growth between the post-war period and the bursting of the bubble by analyzing the impact of the three major industries, the yen exchange rate and the central bank interest rate, as well as consumption on GDP. It can be concluded from the analysis that the Plaza Accord was only a trigger, and Japan had an interest rate policy blunder and an overly-rapid exchange rate appreciation in those years. Therefore, the policy blunder was the main reason that pushed Japan into the abyss. From Japan's experience, for the rest of Asia, it is important not only to insist on policy independence but also to avoid the hollowing out of high-precision industries.