A Comparative Study Of Japan, Taiwan (region) Asset Bubble Burst In The Real Economy Trend Differences

With Chinese Mainland's economic development, real estate bubble has been on the show since 2003. As the RMB's appreciation in 2005, the stock bubble emerged obviously at that time, and lasted until October, 2007. However, as the tight monetary policy came on, the bubble of the stock and real estate market has been controlled. But both asset markets have cooled down to some extent, especially the stock market, witnessing huge drop since then. Then attention began to be paid on the asset bubble burst problem because the burst of the bubble economy could trigger a serious economic recession of the real economy.In the late 1980s, Japan and Taiwan(Area) had experienced the impact of the bubble economy nearly at the same time, the same as the current Chinese Mainland. The asset prices rising and declining suddenly and sharply were the significant feature of the bubble economy. After the burst of bubble economy, the real economy of Japan got into economic recession of more than 10 years .Taiwan(Area) 's real economy was badly hit in one year and then recovered later. Looking at the background and causes of the bubble economy in Japan and Taiwan(Area), there were many similarities. But why there were very different trends of the real economy after the bubble burst? And what are the better factors of Taiwan (Area) than of Japan to avoid damages that the real economy of Japan had experienced? Without any doubt, the comparative study on Japan and Taiwan(Area) would shed light on Chinese Mainland's current problem.So based on all the above, this paper firstly reviews the classic macro-economic theories, then generalizes the mechanism through which the asset bubble burst exerts influence on real economy as the major theoretical analysis framework. What's more, from a comparative study perspective, the characteristics and background of the asset bubble in Japan and Taiwan(Area) in the late 1980s will be analyzed. Furthermore, the asset bubble burst as well as the following different real economy performance will be described. Based all the above reality and under our theoretical framework, the underling reasons behind the different real economy performance will be explored in detail. Then suggestions will be offered for the current Chinese Mainland.