The Structural Determinants of Invoice Currencies in Japan: The Case of Foreign Trades with East Asian Countries
AbstractThis paper investigates why invoice rations of the Japanese yen are relatively low for Japan's foreign trades. The first part of the paper investigates the determinants of invoice currencies in Japan's exports with East Asian countries. Focusing on the heavy reliance of Japan's exports on the United States, we show that "pricing-to-market"(PTM) behavior of Japanese exporters may explain the choice of invoice currency by Japanese exports well. The second part of the paper considers other structural determinants of the invoice currencies. In the analysis, we focus on invoice currency rations in Japan's imports and on the relation between invoice ratios and the trade dependency. We show that low yen-invoiced rations are mainly caused by the large shares of oil and raw materials in Japan's imports. We also show that recent changes in Japan's invoice currency ratios are due to the changing trade dependency to the United States.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number a307.
Date of creation: Mar 1995
Date of revision:
Other versions of this item:
- Shin-ichi Fukuda, 1996. "The Structural Determinants of Invoice Currencies in Japan: The Case of Foreign Trade with East Asian Countries," NBER Chapters, in: Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5, pages 147-165 National Bureau of Economic Research, Inc.
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- Chow, Hwee Kwan & Kim, Yoonbai, 2003. "A common currency peg in East Asia? Perspectives from Western Europe," Journal of Macroeconomics, Elsevier, vol. 25(3), pages 331-350, September.
- Shin-ichi Fukuda & Masanori Ono, 2006.
"On the Determinants of Exporters' Currency Pricing: History vs. Expectations,"
CIRJE-F-442, CIRJE, Faculty of Economics, University of Tokyo.
- Fukuda, Shin-ichi & Ono, Masanori, 2006. "On the determinants of exporters' currency pricing: History vs. expectations," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 548-568, December.
- Shin-ichi Fukuda & Masanori Ono, 2006. "On the Determinants of Exporters' Currency Pricing: History vs. Expectations," NBER Working Papers 12432, National Bureau of Economic Research, Inc.
- Tse, Y. K. & Ng, L. K., 1997. "The cointegration of Asian currencies revisited," Japan and the World Economy, Elsevier, vol. 9(1), pages 109-114, March.
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