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The accumulation of income balance and its relationship with real exchange rate: Evidence from Japan

Author

Listed:
  • Takahiro Hattori

    (Project Assistant Professor, University of Tokyo and Visiting Scholar, Policy Research Institute, Ministry of Finance, Japan)

  • Ayako Tomita

    (Former Senior Economist, Policy Research Institute, Ministry of Finance, Japan)

  • Kohei Asao

    (Visiting Scholar, Policy Research Institute, Ministry of Finance, Japan)

Abstract

Recently, income balance has been gaining importance in current accounts among many countries. We assess the effect of the real effective exchange rate (REER) on income balance using Japan-specific data and multi-country data. Our results show that the REER does not affect income balance, both on gross and net basis. We also show that accumulation of net foreign assets, driven by the glocalization h of Japanese manufacturing firms, has fostered the income balance surplus in Japan.

Suggested Citation

  • Takahiro Hattori & Ayako Tomita & Kohei Asao, 2023. "The accumulation of income balance and its relationship with real exchange rate: Evidence from Japan," Discussion papers ron351, Policy Research Institute, Ministry of Finance Japan.
    • Handle: RePEc:mof:wpaper:ron351
    as

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    File URL: https://www.mof.go.jp/pri/research/discussion_paper/ron351.pdf
    File Function: First version, 2016
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    More about this item

    Keywords

    Current account; Income account; International investment position; Exchange rates; Japan;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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    This paper has been announced in the following NEP Reports:

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