Comparative Research Between Japanese Economic Bubbles And American IT Bubble

In the end of 20 th century,economic bubbles that occurred in Japan and America all burst at last.But the consequences that resulted from the bubbles in these two countries are very different.Because of the burst of the bubble,Japanese economy went into the process of a prolonged recession which is named “the lost two decades”.While after the burst of IT bubble,the real economy of the US did not get any lengthy or bad impact.To find out the reason that caused this difference,the author,in applying theoretical analysis and empirical analysis,conducts a systematic comparative research of the two bubbles from many points of view,such as the formative factors and policies before and after the burst of the bubbles,etc.Through comparison following conclusions can be drawn.Before the emergence of the bubble,a series of policies taken by Japanese government and the background of Japanese society at that time were interacting together,finally resulting in the economic bubble.At the same time,Japan missed the best timing to halt the bubble,which eventually led to its burst.Moreover,after the burst of the bubble,Japan did not deal in time with the remaining serious problems like the distressed debt.While in America,thanks to the economic and financial policies taken by the Clinton Administration before the burst of the bubble,problems in American economy had been solved and economic base had also been strengthened.Nevertheless,the issue of the formation of IT bubble was as well rooted at the same time.After the burst of the bubble,FRB reduced at the right timing the interest in an active way and subsequently stopped the spread of bad impact.As a result,the bad impact after the burst of the bubble was much worse in Japan than in the US.This paper consists of five chapters.In the first chapter,the author defines the concept of bubble economy,and makes a summary of the researches on this field that have been conducted by domestic and foreign scholars.In the second chapter,the author analyzes the formative factors of these two bubbles.The formative factors of Japan’s bubble are analyzed from three aspects,ie.Japan’s financial liberalization,Plaza Accord and money-making technique,while the formative factors of America’s IT bubble are analyzed from the following aspects: the development of IT industry,the optimism over the IT industry and the low rate and high share price in the 1990 s.In the third chapter,not only the characteristics of the performance of the two bubbles are reviewed,but also the different consequences that resulted from the two bubbles are analyzed.After the burst of the bubble,Japan was caught in a lengthy recession that is named “the lost two decades”.Its economic adjustment process manifests like the shape of “L”,while the burst of IT bubble did not bring on disastrous impact to the US and its economic adjustment process manifests like the shape of “V”.In the fourth chapter,the author makes evaluation and comparison of the relevant policies of Japan and America before and after the burst of the bubble.Starting from the efforts to solve the trade friction with America,the policies taken by Japan were leading step by step to the formation of the bubble.And in 1987,Japan missed the opportunity to stop the growing of the bubble,which finally made the bubble burst.While the US was dealing with serious economic problems at that time under the leadership of the Clinton Administration and the base of real economy was largely strengthened.At the same time,however,the coming of the so-called “new economic era” was also sped up.As for the cognition of the bubble,Japanese government underestimated the negative effects that could be caused by the bubble,and did not make reform to the relevant system,additionally,its policies at the time were not consistent.However,the interest rate in the US that was being decreased frequently by the FRB and usually in time,has had a relatively obvious effect in avoiding economic recession and leading to economic recovery.Finally,the fifth chapter is the conclusion.