Throughout much of the post-World War II era, Japan was the world’s most dynamic economy. Its economic growth rate far surpassed that of the United States and Europe, and it emerged in the 1980s as the world’s largest capital exporter on the back of a powerful export machine that generated persistent large trade and current account surpluses. In 1985 the economy was hit by a “yen shock” as the leading industrial economies drafted the Plaza Accord to produce an orderly decline of the dollar. Still, Japan appeared extremely resilient: The economy grew by 4%–5% per annum in the second half of the 1980s, while the stock market and real estate values soared as interest rates fell to record lows.