So this is probably not as good as I think it could have been, but here is an answer I wrote about Japanese politics and Plaza Accord.
Here is an excerpt related to the question. I’ve made some corrections here and even linking the article I intended to link.
The Bubble began because the Japanese government believed the dollar weakness would cause long term damage to the Japanese economy. Again, Japan relied on the strength on the US dollar and could have developed their own domestic market instead of continuing to support low cost exports to the US and international markets. Workers in [J]apan were/are paid a lot less relatively and this was an advantage to exports. Japan could have increased wages or done other policies like urban and infrastructure development, education, healthcare infrastructure and others, but didn’t. The business and farm lobbies likely influenced the direction.
So the damage was temporary because demand for Japanese goods did not change as a result of the dollar weakness. There was a temporary recession, but it was again temporary.
The Bank of Japan (in 1986) lowered interest rates as a response to this short recession and kept interest rates too low for too long. This began and fueled excessive bank lending, which then inflated property and equity values, the Bubble. Since the yen was strong and the dollar was weak, this meant the Japanese were able to buy assets overseas at outrageous prices using the cheap yen on loan from banks. Property values and assets were expected to continue to rise forever, but this of course was never going to keep happening. [Also ‘bad’ inflation could caused havoc if it already wasn’t]
The Bank of Japan popped the Bubble by raising interest rates sending property and equity values downward causing dominos to fall across the economy. The Bank kept interest rates too high to facilitate a recovery as banks and companies had too much debt. The reasons why Japanese companies and banks could not clean up their bad loans and debts are many, but no one exactly knew the extent of the problems because the banks hid them.
Krugman (19984) explains the economic miracle of Japanese development. Essentially, there is reason why it wasn’t so miraculous. The problems Japan and similar other economies faced can be explained by economics and show there was faultiness in how these governments manage economic growth instead of markets and businesses.