Ludwig von Mises Institute

Plaza Accord

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In the Plaza Accord of 1985, the G-5 powers (France, Germany, Japan, the United Kingdom, and the United States) agreed to subsidize U.S. exporters by artificially lowering the exchange rate of the U.S. dollar. This had improved the profitability of U.S. manufacturers.

The Plaza Accord and the accompanying monetary expansion in Japan was one of the causes of the Japanese asset price bubble. To bail out the Japanese manufacturing economy, the Reverse Plaza Accord was signed in 1995 and initiated another boom.[1]

References[edit]

  1. Gene Callahan and Roger W. Garrison. "Does Austrian Business Cycle Theory Help Explain the Dot-Com Boom and Bust?", The Quarterly Journal of Austrian Economics, Vol. 6, No. 2 (Summer 2003). Referenced 2011-06-22.

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