Monetary Policy Factors Analysis Of Bubble Economy In Japan

In the 1990 s, the outbreak of the Japan’s bubble economy crisis brought disastrous effect on Japan’s economy. Japan’s central bank put price stability as the ultimate goal of monetary policy, and put central bank rediscount rate as the main tool of monetary policy. But theindependence of Japan’s monetary policy whichattached to the political will of the government authorities in the long-termand suffered too much intervention from the United Stateswas low.Whatultimatelyresultedtowrong monetary policy had beenimplemented and triggered the bubble economic crisis was Japan’s central bank couldn’t estimate the exact problem of economic situation and blindly pursued the stability of exchange rate.From the point of view of the economic cycle, misguided monetary policy which directly cause bubble economic crisis followed economic cycle twice. In the first time, Japan’s central bank increased the strength of the expansion of the monetary policy under the condition of the economic recovery, and kept the expansionary monetary policy in next time during the boom period. That led to the formation and expansion of the bubble economy. In the second time, the central bank drastically tightened monetary policy in a short time during the period of economic contraction. That rapidly brought about the collapse of the bubble economy. So the bubble economy crisis has eruptedas these two crucial reasons.The main contents of this paper include the following five parts: The first part is introduction, mainly illustratethe selected topic significance, the related literature review, and the structure and innovation of this paper; The second part mainly introduces the formation, the collapse and the influence of the Japan’s bubble economy, and expoundsthe evolution of Japanese monetary policy from post-war to the bubble economy, and then to the recession of the 90s; The third part mainly introduces the measurement of modern economic cycle, and divided into stages of economic cycle from 1960 to 2010 in Japan through the HP filter and analysis method of "bottom to bottom", and find out the bubble economy in which phase of the economic cycle;The fourth part discusses the correlation of the change of Japan’s monetary policyand the fluctuation of economic cycle throughthe qualitative and quantitative analysis, and explains the reasonof the outbreak of the Japan’s bubble economy; The fifth partmainly gives some suggestions to the monetary policy of China.From the study,we can find that, Japan’s monetary policy lagged behind the economic growth to a certain extent, and this led to the effectiveness of monetary policy contributed to the fluctuation of economic cycle; Especially in the mid and late 80 s, two wrong monetary policy respectively contributed to the expansion and contraction phase of the economic cycle, leadinggreatly ups and downs of economy;And in this economic cycle, Japan’s bubble economy rapidly expand with the expansion of cycle, and then quickly breakdown with the contraction of cycle. There are many similarities between the economic situation in China and the background of Japan’s bubble economy, so China must learn experiences and lessons from Japan’s monetary policy.On the one hand, we should always insist on the independence of monetary policy. On the other hand, we should establish an effective macroeconomic monitoring system, andmoderately implement the monetary policy.