U.S. Bilateral Trade Deficits with China and Japan: The Role of Japanese Direct Investment
AbstractThis paper argues that Japanese Foreign Direct Investment (FDI) in China plays a critical role in home and host country’s bilateral trade imbalances with the U.S. Using six cross-sectional panel data from 1981 to 2007, we find strong evidence in support of the role of Japanese FDI in mounting U.S.-China trade imbalance and in reducing deficit of U.S. trade with Japan. The devaluation of Chinese Yuan does not affect its bilateral trade balance with the U.S. and there are mixed evidence in terms of the relationship between the Japanese Yen exchange rate and the U.S.-Japan trade deficit.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30740.
Date of creation: May 2010
Date of revision:
Publication status: Published in The Empirical Economics Letters 6.10(2011): pp. 527-534
Foreign Direct Investment; Bilateral Trade Imbalance; Devaluation of Exchange Rate;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F2 - International Economics - - International Factor Movements and International Business
- F1 - International Economics - - Trade
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