IDEAS home Printed from https://ideas.repec.org/p/hai/wpaper/200010.html
   My bibliography  Save this paper

Will Japan's Current Account Turn to Deficit?

Author

Listed:
  • F. Gerard Adams
  • Byron Gangnes

    (Department of Economics, University of Hawaii at Manoa)

Abstract

The Japanese current account has been in surplus since 1981, ranging from 1% to more than 4% of GDP. In this paper, we review the macroeconomic forces that have driven the surplus and describe likely changes in the first part of the next century. In coming years, structural change in Japan's economy-population aging, the globalization of production, and financial market reforms-will alter the underlying determinants of the surplus. While the net effect of these forces is difficult to predict, the most likely outcome is a gradual closing of the current account gap. We use large-model simulation analysis to evaluate the potential for specific developments to alter the current account, and we assess their likely impact on the Japanese economy.

Suggested Citation

  • 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.
    • Handle: RePEc:hai:wpaper:200010
    as

    Download full text from publisher

    File URL: http://www.economics.hawaii.edu/research/workingpapers/010.pdf
    File Function: First version, 2000
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
    2. Razin, A., 1993. "The Dynamic-Optimizing Approach to the Current Account: Theory and Evidence," Papers 2-93, Tel Aviv - the Sackler Institute of Economic Studies.
    3. 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.
    4. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    5. Paul R. Masson & Ralph W. Tryon, 2019. "Macroeconomic Effects of Projected Population Aging in Industrial Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 2, pages 17-56, World Scientific Publishing Co. Pte. Ltd..
    6. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
    7. Adams, F. Gerard & Gangnes, Byron, 1996. "Japan's persistent trade surplus: Policies for adjustment," Japan and the World Economy, Elsevier, vol. 8(3), pages 309-333, September.
    8. Alan J. Auerbach & Laurence J. Kotlikoff & Robert P. Hagemann & Giuseppe Nicoletti, 1989. "The Economic Dynamics of an Ageing Population: The Case of Four OECD Countries," OECD Economics Department Working Papers 62, OECD Publishing.
    9. Horioka, Charles Yuji, 1990. "Why is Japan's household saving rate so high? A literature survey," Journal of the Japanese and International Economies, Elsevier, vol. 4(1), pages 49-92, March.
    10. Mr. Steven A. Symansky & Mr. Peter S. Heller, 1997. "Implications for Savings of Aging in the Asian “Tigers”," IMF Working Papers 1997/136, International Monetary Fund.
    11. Obstfeld, Maurice, 1981. "Macroeconomic Policy, Exchange-Rate Dynamics, and Optimal Asset Accumulation," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1142-1161, December.
    12. Maddison, A., 1991. "A Long Run Perspective on Saving," Papers 443, Groningen State, Institute of Economic Research-.
    13. Taniuchi, Mitsuru, 1997. "Recent developments in Japan's financial sector: Bad loans and financial deregulation," Journal of Asian Economics, Elsevier, vol. 8(2), pages 225-244.
    14. Matthew Higgins & Jeffrey G. Williamson, 1996. "Asian Demography and Foreign Capital Dependence," NBER Working Papers 5560, National Bureau of Economic Research, Inc.
    15. Alan J. Auerbach & Laurence J. Kotlikoff & Robert Hagemann & Giuseppe Nicoletti, 1989. "The Dynamics of an Aging Population: The Case of Four OECD Countries," NBER Working Papers 2797, National Bureau of Economic Research, Inc.
    16. Horioka, Charles Yuji, 1995. "Is Japan's Household Saving Rate Really High?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(4), pages 373-397, December.
    17. F. Gerard Adams & Peter A. Prazmowski, 2003. "Why are saving rates in East Asia so high? Reviving the life cycle hypothesis," Empirical Economics, Springer, vol. 28(2), pages 275-289, April.
    18. Takatoshi Ito & Michael Melvin, "undated". "The Political Economy of Japan's Big Bang," Working Papers 2132866, Department of Economics, W. P. Carey School of Business, Arizona State University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why New Zealand’s current account deficit will begin to fall
      by Matt Nolan in TVHE on 2009-01-13 08:00:41

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dekle, Robert, 2004. "Financing consumption in an aging Japan: The role of foreign capital inflows and immigration," Journal of the Japanese and International Economies, Elsevier, vol. 18(4), pages 506-527, December.
    2. Jan Babecky & Kamil Dybczak, 2009. "The Impact of Population Ageing on the Czech Economy," Working Papers 2009/1, Czech National Bank.
    3. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.
    4. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    5. Dramane Coulibaly & Blaise Gnimassoun & Valérie Mignon, 2018. "The tale of two international phenomena: International migration and global imbalances," Working Papers 2018-02, CEPII research center.
    6. Butler, Monika, 1999. "Anticipation effects of looming public-pension reforms," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 119-159, June.
    7. Andrew K. Rose & Saktiandi Supaat & Jacob Braude, 2009. "Fertility and the real exchange rate," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(2), pages 496-518, May.
    8. Adams, F. Gerard & Gangnes, Byron, 1996. "Japan's persistent trade surplus: Policies for adjustment," Japan and the World Economy, Elsevier, vol. 8(3), pages 309-333, September.
    9. Coulibaly, Dramane & Gnimassoun, Blaise & Mignon, Valérie, 2020. "The tale of two international phenomena: Migration and global imbalances," Journal of Macroeconomics, Elsevier, vol. 66(C).
    10. Naohiro Yashiro & Akiko Sato Oishi, 1996. "Population Aging and the Savings-Investment Balance in Japan," NBER Chapters, in: The Economic Effects of Aging in the United States and Japan, pages 59-87, National Bureau of Economic Research, Inc.
    11. John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury.
    12. David N. Weil, 1996. "Intergenerational Transfers, Aging, and Uncertainty," NBER Chapters, in: Advances in the Economics of Aging, pages 321-342, National Bureau of Economic Research, Inc.
    13. McCallum, Bennett T, 2000. "Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(4), pages 870-904, November.
    14. Freddy Heylen & Renaat Van de Kerckhove, 2014. "Heterogeneous ability and the effects of fiscal policy on employment, income and welfare in general equilibrium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/898, Ghent University, Faculty of Economics and Business Administration.
    15. Claire Giordano, 2023. "Revisiting the real exchange rate misalignment‐economic growth nexus via the across‐sector misallocation channel," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1329-1384, September.
    16. Selahattin Dibooglu, 1997. "Accounting for US current account deficits: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 787-793.
    17. Zsofia Barany & Nicolas Coeurdacier & Stéphane Guibaud, 2015. "Fertility, Longevity and International Capital Flows," Sciences Po publications info:hdl:2441/5402sfihji9, Sciences Po.
    18. Alstadheim Ragna & Henderson Dale W., 2006. "Price-Level Determinacy, Lower Bounds on the Nominal Interest Rate, and Liquidity Traps," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-27, November.
    19. Ozawa Terutomo & Van den Berg Hendrik & Lewer Joshua J. & Krol Robert & Makin Anthony J., 2001. "Global Economy Quarterly, Issue 1," Global Economy Journal, De Gruyter, vol. 2(1), pages 1-109, December.
    20. Kogel, Tomas, 2005. "Youth dependency and total factor productivity," Journal of Development Economics, Elsevier, vol. 76(1), pages 147-173, February.

    More about this item

    Keywords

    Japanese current account; forecast;

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:200010. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Web Technician (email available below). General contact details of provider: https://edirc.repec.org/data/deuhius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.