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China-Japan-United States integration amid global rebalancing: A computable general equilibrium analysis

  • Kawai, Masahiro
  • Zhai, Fan

Using a global general equilibrium trade model, this paper assesses the long-term implications of global rebalancing for Asian economies and explores the benefits of China-Japan-United States (US) integration. The analysis suggests that consumption evaporation, a growth slowdown in the US, and the consequent current account correction would force China, Japan, and other East Asian economies to undergo substantial structural adjustments. A combination of domestic reform aimed at boosting service sector productivity and external liberalization aimed at fostering broader economic integration will be critical for East Asian economies to facilitate their economic rebalancing and sustained growth. Our global computable general equilibrium (CGE) analysis suggests that China and Japan need to strengthen their economic ties with the US while at the same time bringing other East Asian economies into this integration process.

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Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 20 (2009)
Issue (Month): 6 (November)
Pages: 688-699

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Handle: RePEc:eee:asieco:v:20:y:2009:i:6:p:688-699
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  1. Costas Arkolakis, 2007. "Market Access Costs and the New Consumers Margin in International Trade," 2007 Meeting Papers 234, Society for Economic Dynamics.
  2. Kenneth Rogoff & William Brainard & George Perry, . "Global Current Account Imbalances and Exchange Rate Adjustments," Working Paper 33687, Harvard University OpenScholar.
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  4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  5. Christian Broda & David E. Weinstein, 2004. "Globalization and the Gains from Variety," NBER Working Papers 10314, National Bureau of Economic Research, Inc.
  6. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550.
  7. Zhai, Fan, 2008. "Armington Meets Melitz: Introducing Firm Heterogeneity in a Global CGE Model of Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 575-604.
  8. James Markusen & Thomas Rutherford & David Tarr, 2005. "Trade and direct investment in producer services and the domestic market for expertise," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 758-777, August.
  9. Shujiro Urata & Kozo Kiyota, 2003. "The Impacts of an East Asia FTA on Foreign Trade in East Asia," NBER Working Papers 10173, National Bureau of Economic Research, Inc.
  10. Joseph Francis Francois & Ganeshan Wignaraja, 2008. "Economic Implications of Deeper Asian Integration," Economics working papers 2008-13, Department of Economics, Johannes Kepler University Linz, Austria.
  11. Marcel Mérette & Evangelia Papadaki & Jorge Hernandez & Yu Lan, 2008. "Foreign Direct Investment Liberalization Between Canada and the USA: A CGE Investigation," Atlantic Economic Journal, International Atlantic Economic Society, vol. 36(2), pages 195-209, June.
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