Repercussions of the Dodge Plan on Japanese economy in 1949-1955

Main focus of this thesis is a research of 7 of 9 stabilization points, which were introduced by American government in December 1948 as a condition in order to achieve economic stabilization of Japan. These points should have been reached via five main measures of the Dodge plan beginning in 1949. Main economic goals of occupation forces were to stop a rising inflation in Japan, stabilize Exchange rate, reform a tax system and balance a Japanese budget. The goal of halting the inflation is a subject of hypothesis in this particular thesis. The focus is to verify if an implementation of a Dodge plan after 1949 till 1955 was a main factor of slowing down the inflation in Japanese economy.Following a quantitative research also based on empirical knowledge deriving from the Japanese and American literature I can state that halting of an inflation in 1950 was cause mainly by canceling of subsidies to companies harmed by significant price regulations on their products, cancelling loans from Reconstruction Finance Bank and austerity measures taken in personal consumption of Japanese citizens which were introduced by supreme commander of allied powers MacArthur. These three measures decreased an aggregate demand. In contrary to those deflation downtrends there were only inflation tendencies for the whole 1950. Even if we take monetary policy or inflation tendencies of prices of imported goods, which are demonstrated by index of import prices by Bank of Japan. Selected hypothesis „implementation of Dodge plan from American occupation administration was a main reason of slowing down the inflation in Japan after 1949 “ was verified as truth. Following that the inflation raised again from 1951, I am assuming from the cause of renewed expansionary monetary policy and higher demand for goods and services as a result of Korean war boom.