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Japan's persistent trade surplus: Policies for adjustment

  • Adams, F. Gerard
  • Gangnes, Byron

While part of the recent increase in the Japanese trade surplus can be attributed to the Japanese recession, the surplus has widened despite the appreciation of the yen and enactment of policies to open Japanese markets. We review the trade surplus issue in the light of theories of trade and current account adjustment. We evaluate the potential for exchange appreciation and Japanese fiscal policy to reduce the imbalance, estimating their effects using simulations of the NIRA-LINK model of the US-Japan-world economy. The simulations show that moderate use of macropolicies would not be sufficient to eliminate the trade imbalance.

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Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 8 (1996)
Issue (Month): 3 (September)
Pages: 309-333

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Handle: RePEc:eee:japwor:v:8:y:1996:i:3:p:309-333
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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  1. C. Fred Bergsten & Marcus Noland, 1993. "Reconcilable Differences? United States-Japan Economic Conflict," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 34, January.
  2. Maurice Obstfeld, 1980. "Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset Accumulation," NBER Working Papers 0599, National Bureau of Economic Research, Inc.
  3. Peter Hooper & Jaime R. Marquez, 1993. "Exchange rates, prices, and external adjustment in the United States and Japan," International Finance Discussion Papers 456, Board of Governors of the Federal Reserve System (U.S.).
  4. Takatoshi Ito, 1994. "On Recent Movements of Japanese Current Accounts and Capital Flows," NBER Chapters, in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, NBER-EASE Volume 3, pages 31-52 National Bureau of Economic Research, Inc.
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  9. Dornbusch, Rudiger, 1973. "Devaluation, Money, and Nontraded Goods," American Economic Review, American Economic Association, vol. 63(5), pages 871-880, December.
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  11. Kouri, Pentti J K, 1976. " The Exchange Rate and the Balance of Payments in the Short Run and in the Long Run: A Monetary Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 280-304.
  12. Sidney S. Alexander, 1952. "Effects of a Devaluation on a Trade Balance," IMF Staff Papers, Palgrave Macmillan, vol. 2(2), pages 263-278, April.
  13. Swoboda, Alexander K, 1976. " Comment on P. J. K. Kouri, "The Exchange Rate and the Balance of Payments in the Short Run and in the Long Run: A Monetary Approach."," Scandinavian Journal of Economics, Wiley Blackwell, vol. 78(2), pages 305-308.
  14. Rose, Andrew K., 1991. "The role of exchange rates in a popular model of international trade : Does the 'Marshall-Lerner' condition hold?," Journal of International Economics, Elsevier, vol. 30(3-4), pages 301-316, May.
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  17. Ronald G. Bodkin & Lawrence R. Klein & Kanta Marwah, 1991. "A History of Macroeconometric Model-Building," Books, Edward Elgar Publishing, number 51.
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