External Adjustments under Increasing Integration: Japanese Perspective
AbstractThis paper is to investigate how much realignment of currencies is needed for adjustments to the current account imbalances of Japan compared with those of East Asia as a whole, given the productions networks in East Asia. The analyses show that the large realignments of the Japanese yen and other East Asian currencies would be needed if the adjustments are completed with only exchange rates. We also find that the degree of the exchange rate adjustments of East Asia as a whole is smaller than that of Japan only. Moreover, we investigate why the adjustment becomes more difficult if we rely only on the exchange rates in Japan. We find that Japanese outward FDI has increased independently with the exchange rate and that a ratio of income account to current account has increased due to the FDI. The findings imply that the Japanese economy has an increasing structural part of the Japanese current account which does not respond to the exchange rate movement.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd08-050.
Date of creation: Mar 2009
Date of revision:
Other versions of this item:
- Eiji Ogawa & Kentaro Iwatsubo, 2009. "External Adjustments under Increasing Integration: Japanese Perspective," Discussion Papers 0830, Graduate School of Economics, Kobe University.
- NEP-ALL-2009-04-18 (All new papers)
- NEP-CBA-2009-04-18 (Central Banking)
- NEP-OPM-2009-04-18 (Open Economy Macroeconomic)
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