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Japan's Persistent Trade Surplus: Policies for Adjustment

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  • Byron Gangnes

    (Department of Economics, University of Hawaii at Manoa)

  • F. Gerard Adams

Abstract

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.

Suggested Citation

  • Byron Gangnes & F. Gerard Adams, 1994. "Japan's Persistent Trade Surplus: Policies for Adjustment," Working Papers 199404, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:199404
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    Cited by:

    1. F. Gerard Adams & Byron Gangnes, 2000. "Will Japan's Current Account Turn to Deficit?," Working Papers 200010, University of Hawaii at Manoa, Department of Economics.

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    More about this item

    Keywords

    Japanese trade surplus; econometric simulations;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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