3 On the other hand, price stability was reinforced by the yen appreciation after the Plaza Accord in 1985 in spite of the accelerating money supply. 4 Plentiful market liquidity facilitated the active management of risk portfolios through relaxing the liquidity constraint and affected the willingness of investors to take more risks, leading to the reduction in risk and term premia.
From the second episode, we can draw the lesson that a positive “real money gap” can cause the asset price bubbles through the “financial accelerator mechanism” and the reduction in risk and term premia, precisely because price stability is maintained.