The Japanese current account has been in surplus since 1981, ranging from 1% to more than 4% of GDP. In this paper, we review the macroeconomic forces that have driven the surplus and describe likely changes in the first part of the next century. In coming years, structural change in Japan's economy-population aging, the globalization of production, and financial market reforms-will alter the underlying determinants of the surplus. While the net effect of these forces is difficult to predict, the most likely outcome is a gradual closing of the current account gap. We use large-model simulation analysis to evaluate the potential for specific developments to alter the current account, and we assess their likely impact on the Japanese economy.
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Publisher Info
Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number
200010.
Length: 35 pages Date of creation: 2000 Date of revision: Publication status: Published in Magnus Blomström, Byron Gangnes and Sumner La Croix, eds., Japan’s New Economy: Continuity and Change in the 21st Century, Oxford University Press, 2000. Handle: RePEc:hai:wpaper:200010
Find related papers by JEL classification: F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation
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