플라자 합의 이후 일본의 경기정책 효과에 대한 분석

Abstract

This thesis paper will analyze the effects of Japan’s economic policies. The 1985 Plaza Agreement induced Yen appreciation, and this reduced Japan’s foreign exports, which brought recession on the Japan’s national economy. In order to change the economic rhythm, Japan instituted flexible monetary and fiscal policies. After that, speculation ensued in the stock and real estate markets, and a bubble formed. The Bank of Japan in 1990 increased benchmark interest in order to reduce the expansion of the bubble and switched to constrictive monetary policy. In 1996 and 1997, the Japanese economy became mired in recession due to Southeast Asia’s financial crisis. The bubble collapse that started in the early 1990’s made the financial crisis even worse. The consumption tax increase in April of 1997 contributed to the prolonged recession. In 2001, Japan began quantitative easing in order to overcome continuing deflation and the economy recovered to a certain extent. The increase in price of crude oil and raw materials and financial crisis in the U.S. in the middle of 2007 brought the world economy into recession; Japan’s GDP growth also dropped to negative in the middle of 2008. In 2013, Japanese Prime Minister Abe instituted unlimited quantitative easing. As the economy recovered with the new policy, the consumption tax was increased again from 5% to 8% for fiscal health. However, the increase of consumption tax stopped economic recovery and Japanese banks instituted negative bank-rate policy starting 2016, but it cannot be said that Japanese economy is recovering. In this thesis, based on statistical analysis and historical facts, I have divided the time periods into Period 1 (January 1985 – December 1994), Period 2 (January 1995 – December 2004), and Period 3 (January 2005–December 2015). The VAR analysis of how the change in money supply has on the industrial production index is the following. In Period 1, the difference in money supply had a positive impact on the industrial production index. In Period 2, only money supply that did not meet expectations had a weak impact on the index. In Period 3, the difference in money supply had a negative impact on the index, and money supply that did not meet expectations had no impact at all. This result aligns with what Yoon (2014) found in his research, and it is the reason for the inability of Japanese economy to recover despite several rounds of quantitative easing based on change in formation of expectations. This mechanism is important because South Korea is also on a route similar to one that Japan was on. Therefore, because discretionary policies cannot impact money supply, money supply has to be controlled through % rule or similar laws or method.