Before the onset of Japan’s contemporary economic crisis, economic performance was unsurpassed in terms of growth rates, equity or resilience to external shocks. There were many factors that contributed to Japan’s bubble economy, including a determined official push to move the economy from excessive dependence on foreign demand to reliance on domestic demand. Foreign exports and increasing balance of payments surpluses frequently led to trade friction with the United States. As disputes emerged and were resolved after some acrimony, the only constant was a progressive worsening of the American trade balance with Japan. In the mid-1980s, American frustrations led to a growth in sentiment in favour of protectionism directed at Japan which at its worst could have undermined the foundations of international liberal trade in general. As a desperate measure to stave off threats to liberal trade, the Plaza Accord, an agreement among the Group of Five (G-5) countries in 1985, sought to restore the trade balance through exchange rate adjustments. A lagged decline in exports and fears of impending economic downturn prompted the Japanese government to stimulate domestic demand to compensate for slowdown in export demand. With the purpose of providing relief to domestic manufacturers, the government announced plans to inject an additional Y6 trillion into public works programmes. The Bank of Japan also cut interest rates from 5.0 per cent in 1985 to 3.0 per cent in November 1986 and to 2.5 per cent in February 1987. The interest rate cuts had the anticipated stimulatory effect on stock and property markets.