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Accounting for the economic relationship between Japan and the Asian Tigers

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  • Hideaki Hirata
  • Keisuke Otsu

Abstract

In this paper, we construct a two-country business cycle accounting model in order to investigate quantitatively the relationship between Japan and the Asian Tigers. Our model is based on Backus, Kehoe and Kydland (1994) in which each economy produces tradable intermediate goods that are aggregated to form final goods within each economy. We apply the business cycle accounting method of Chari, Kehoe and McGrattan (2007) and find that the main source of high frequency fluctuation in output in each economy is the fluctuation of production efficiency within its own economy. Furthermore, the growth in the Asian Tigers'production efficiency had a significant positive effect on Japanese economic growth over the 1980-2009 period through the endogenous terms of trade effect.

Suggested Citation

  • Hideaki Hirata & Keisuke Otsu, 2011. "Accounting for the economic relationship between Japan and the Asian Tigers," Studies in Economics 1120, School of Economics, University of Kent.
    • Handle: RePEc:ukc:ukcedp:1120
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    Cited by:

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    3. Pedro Brinca & João Ricardo Costa Filho & Francesca Loria, 2024. "Business cycle accounting: What have we learned so far?," Journal of Economic Surveys, Wiley Blackwell, vol. 38(4), pages 1276-1316, September.
    4. Selover, David D. & Yagihashi, Takeshi, 2015. "Examining industrial interdependence between Japan and South Korea: A FAVAR approach," Japan and the World Economy, Elsevier, vol. 36(C), pages 67-87.
    5. Fernandes, Daniel, 2022. "Business Cycle Accounting for the COVID-19 Recession," MPRA Paper 111577, University Library of Munich, Germany.

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    More about this item

    Keywords

    International Business Cycles; Business Cycle Accounting; Terms of trade; Productivity;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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