Causes of Housing Bubble in Japan

Abstract

To find ways to facilitate the development of the real estate economy, this paper examines the Japanese housing bubble of the 1980s, one of the most representative in history. Japan's housing bubble provides us with a good economic model, for which we need to discuss the impact of monetary policy on the housing bubble. Through monetary policy, combined with Taylor's rule, it is analyzed that most of the monetary policy in Japan during that period was in a loose state. Loose monetary policy brought about a series of crises that are detrimental to economic development, such as the rise in land and stock prices, coupled with a series of social problems such as the aging of the population, which ultimately led to the occurrence of the real estate bubble. Japans bubble economy provided a good reference for future generations: the government needs to control the degree of easing and strengthen supervision and risk management.