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Building a new framework for analyzing effects of Japanese shocks on Asia


  • Etsuro Shioji


This paper is a first step toward building a new macroeconomic model that is usable for analyzing the effects of shocks that originate in Japan on Asian economies. The new framework borrows its central ingredients from the literature of the “new open economy macroeconomics†, that is characterized by explicit dynamic optimization, short-run nominal rigidity, and imperfect substitution between products. The last feature of this approach enables us to analyze how the trade structure between countries influences international transmission of shocks. This paper builds a three-country model, where the three countries are Asia, Japan, and US, which reflects trade and production patterns between them. Thus, the model is expected to yield more realistic predictions about how policy and productivity shocks in Japan affect Asian economies, both in the short and the long runs

Suggested Citation

  • Etsuro Shioji, 2004. "Building a new framework for analyzing effects of Japanese shocks on Asia," Econometric Society 2004 Far Eastern Meetings 633, Econometric Society.
  • Handle: RePEc:ecm:feam04:633

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    References listed on IDEAS

    1. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
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    More about this item


    new open macroeconomics; three country model; monetary policy; international transmission;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission


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