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In brief: understanding the rising Japanese trade surplus


  • Thomas Klitgaard


Intuition suggests that a strengthening of the yen should moderate Japan's trade surplus by reducing the price competitiveness of Japanese goods. Yet the Japanese merchandise trade surplus more than doubled from 1990 to 1993 while the yen appreciated roughly 30 percent against the dollar. This article shows how a sequence of increases in the yen's value repeatedly pushed the trade surplus higher, delaying the downward adjustment that eventually results from a yen appreciation. Once the yen stabilizes, the author suggests, the surplus should fall significantly.

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  • Thomas Klitgaard, 1994. "In brief: understanding the rising Japanese trade surplus," Quarterly Review, Federal Reserve Bank of New York, issue Spr, pages 34-37.
  • Handle: RePEc:fip:fednqr:y:1994:i:spr:p:34-37:n:v.19no.1

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    Balance of trade ; Japan;


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