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Abenomics’ Trade Spillover


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  • Ferrarini , Benno

    (Asian Development Bank)

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    There is no escaping Japan’s competition in the world markets for goods, particularly in the automotive and electronics industries. Countries exporting to these markets are bound to feel the competitive pressure from a marked fall in the value of the yen. However, while some exporters will be hurt by a cheaper yen, others will benefit from lower input costs, to the extent that they source parts and components from Japan for processing, assembly, and reexport. This paper formalizes these intuitions and tests them against a data set covering more than 90% of world trade at the product level, between 2000 and 2011. Panel regression analysis shows that for countries and products facing Japan’s strongest competition, a 10% appreciation of the yen lowers average exports by more than 3%, which is a sizeable pass through. Elsewhere, the impact is negligible, particularly when vertical trade is accounted for.

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    Bibliographic Info

    Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 379.

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    Length: 26 pages
    Date of creation: 23 Oct 2013
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    Handle: RePEc:ris:adbewp:0379

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    Related research

    Keywords: export competition; exchange rate spillover; Abenomics; Japan; Republic of Korea;

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    1. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    2. Feenstra, Robert & Luck, Philip & Obstfeld, Maurice & Russ, Katheryn N., 2014. "In Search of the Armington Elasticity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9951, C.E.P.R. Discussion Papers.
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