From the above information on Japanese agricultural and industrial activities it is easy to deduce that the pace of expansion of the Japanese economy from 1949 to 1958 was very rapid. Between 1950 and 1951, industrial and agricultural production, as well as real national income, reached their respective pre-war levels (1934-1936 = 100); between 1953 and 1954, including income and real per capita consumption have returned to pre-war levels. Nor has the pace of expansion slowed noticeably after the return to normal; in fact, the production capacity, which on several occasions has represented the limiting factor of greatest moment in the expansionist process, has been continuously increased by the massive investment programs carried out both in the public and in the private sector. On the other hand, the tensions that occurred in the balance of payments were overcome, even when foreign aid ceased, thanks to the conspicuous increase in exports, which, moreover, have not yet reached the same relative importance in the world total as before the war (they are subject to discriminatory treatment in many countries).
According to thedresswizard, this expansion was not regular, but was accompanied by cyclical fluctuations in production and monetary and financial crises. The general monetary and financial disorder that prevailed in the immediate postwar period ceased following the implementation of the “Dodge Stabilization Program”. With it, the exchange rate of 360 yen per US dollar was set for the first time, a rate that has remained unchanged until now; the balanced budget principle was restored, the systematic failure of which in the early post-war years had caused high inflation; export, import and production subsidies, which in previous years had largely contributed to the state budget deficit, were reduced consistently; finally, the banks were given the instruction to severely restrict credit. Following these drastic measures, the pace of economic activity slowed down; on the other hand, a better balance between supply and demand was achieved and the net effect of government finances from inflationary to deflationary.
The stabilization process was interrupted by the outbreak of the conflict in Korea in June 1950. Foreign demand for Japanese products doubled between April 1950 and the same month in 1951 causing a rapid expansion of investment and prices rose sharply as supply had not been able to match demand. The expansionary phase determined by the Korean conflict was followed by a slowdown in the economy, to put an end to which various measures were adopted: reduction of taxes, increase in public investments, strengthening of financial assistance to the private sector. The resulting expansion in demand caused significant inflationary pressures to reappear in 1952 and 1953; the trend of exchanges with the foreign countries became unfavorable again in 1953 and reserves decreased significantly, despite the extraordinary collections of US dollars. It was therefore necessary to return to a restrictive policy, implemented through monetary and credit maneuvers, given that the state budget had a net inflationary effect. Favorable external influences contributed to the success of the measures taken to rebalance foreign exchanges. Furthermore, in 1955, for the first time after the war, the improvement in the balance of payments took place in a climate of general stability, unlike in 1950 (the increase in exports was then followed by inflation within) and in 1954 (the improvement of the external accounts was obtained at the cost of internal deflation). Beginning in the export industry, the expansion rapidly spread to all other sectors and continued until the beginning of 1957. The policy of reducing investment and limiting credit, adopted in May 1957, to contain pressure inflationary events that began in the second half of 1956, coincided with the onset of the world recession. The latter, as far as the Japanese economy is concerned, resulted in a marked slowdown in the rate of development of industrial production, which lasted until towards the end of 1958. adopted in May 1957, to contain the inflationary pressures which emerged from the second half of 1956, coincided with the onset of the world recession. The latter, as far as the Japanese economy is concerned, resulted in a marked slowdown in the rate of development of industrial production, which lasted until towards the end of 1958. adopted in May 1957, to contain the inflationary pressures which emerged from the second half of 1956, coincided with the onset of the world recession. The latter, as far as the Japanese economy is concerned, resulted in a marked slowdown in the rate of development of industrial production, which lasted until towards the end of 1958.
The experience of this latest recession indicates that fundamental changes have recently occurred in the Japanese economy: 1) the limit to economic expansion is now represented not so much by the available production capacity as by the level of global demand; 2) the inclusion of Japanese production in the current of international trade makes Japan more vulnerable to cyclical fluctuations in the world economy. In supporting the effort to reconstruct and expand production capacity, public finances have in the past been the cause of cyclical fluctuations in economic activity; following the experiences, the accent was placed, instead, on their anti-cyclical function, with respect to fluctuations induced from the outside. Moreover, the task of promoting
The Bank of Japan (Nippon Ginko) acts as a central bank and administers the control of foreign exchange. At the initiative of the occupation authorities, the entire banking and financial system was reorganized after the war. In particular, the Yokohama Specie Bank, which had previously enjoyed a near-monopolistic position in the foreign exchange business, was downsized in 1947 and took on the new name of Bank of Tokyo in 1954. In addition, several new credit and financial institutions have sprung up, some of them state-owned. In 1947 the Bank of Japan was created to finance the reconstruction; when it was dissolved (1951) its place was taken by the more modest Japanese Development Bank. The Export-Import Bank of Japan was also created between 1951 and 1952, to facilitate the financing of foreign trade. As of October 1957, the Japanese banking system consisted of 90 banks with a total of 5,713 branches; 14 foreign banks had their own branches in Japan. The monetary unit is lo yen (divided into 100 sen). In 1953 the gold parity was declared (0.00246853 grams of fine per 1 yen) and the exchange rate of 360 yen per 1 US dollar was confirmed.