This stagnation, however, ended rather quickly, and, as is well known, what followed was economic expansion accompanied by asset price bubbles. The coexistence of high economic growth and low inflation throughout this period suggested gains in productivity, and we observed widespread optimism that Japan had overcome the adverse effect of not only the oil shocks but also the yen's appreciation.
BIS Review 47/2003  1  I stress this point not to contradict the idea that the best way for monetary policy to contribute to longterm growth is by ensuring an economic climate of price stability. It is well known that monetary policy is not able to directly affect the level or growth of potential output.