Has the exchange depreciation contributed to exports? The Japanese case
DOI:
https://doi.org/10.14738/abr.84.8073Keywords:
yen depreciation, exchange rate, export, JapanAbstract
Many people believe that depreciation of exchange rate promotes exports and leads to economic growth. Export-oriented countries sometimes become very nervous about currency appreciation. This study examines whether or not the Japanese yen’s depreciation has increased volume of exports after Abenomics, which flowed a large amount of capital into the domestic markets to boost the economy. The Japanese yen has depreciated according to quantitative easing, however, whether or not the volume of exports has increased is not certain. Empirical results of this study show that there is not a strong relationship between currency depreciation of the yen and Japanese exports. Also, elasticity, the total percentage changes in trade divided by the total percentage changes in exchange rates, is calculated for main international trade partners for Japan. The results are different for each country. The shock on the exchange rate appears and continues after some time passes.
References
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Arkolakis, C., Costinot, A., & Rodriguez-Clare, A. (2012). New trade models same old gains? American Economic Review, 102(1), 94-130.
Badinger, H., & Fichet, C. A. (2019). Trade balance dynamics and exchange rates: In search of the J-curve using a structural gravity approach. Review of International Economics, 27(4), 1268-1293.
Barseghyan, G., & Hambardzumyan, H. (2018). The effects of exchange rate volatility on exports: Evidence from Armenia. Applied Economics Letters, 25(18), 1266-1268. http://dx.doi.org/10.1080/13504851.2017.1418064
Chang, B. H., Raiput, S. K. O., & Bhutto, N. (2019). Impact of exchange rate volatility on the U.S. exports: A new evidence from multiple threshold nonlinear ARDL model. Journal of International Commerce, Economics, and Policy, 10(2), 1-26.
Fontagne, L., Martin, P., & Orefice, G. (2018). The international elasticity puzzle is worse than you think. Journal of International Economics, 115, 115-129. http://dx.doi.org/10.1016/j.jinteco.2018.08.011
Gallaway, M. P., McDaniel, C. A., & Rivera, S. A. (2003). Short-run and long-run industry-level estimates of U.S. Armington elasticities. North American Journal of Economics and Finance, 14(1), 49-68.
Haider, S., and Adil, M. H. (2017). An analysis of impact of exchange rate volatility on the Indian manufacturing exports. Empirical Economics Letters, 16(12), 1375-1382.
Hanslin, G., Lein, S. M., & Schmidt, C. (2016). Exchange rate and foreign GDP elasticities of Swiss exports across sectors and destination countries. Applied Economics, 48(55-57), 5546-5562.
Iossifoy, P. K., and Fei, X. (2019). Real effective exchange rate and trade balance adjustment: The case of Turkey. IMF Working Papers, 19/131.
Iwaisako, T., and Nakata, H. (2017). Impact of exchange rate shocks on Japanese exports: Quantitative assessment using a structural VAR model. Journal of the Japanese and International Economies, 46, 1-16.
Kato, A. (2015). Effects of exchange rate changes on East Asian technology-intensive exports. Journal of International Trade and Economic Development, 24(5-6), 809-821.
Kurihara, Y. and Nezu, E. (2006). Recent stock price relationships between Japanese and U.S. stock markets. Studies in Economics and Finance, 23(3), 211-226.
Kurihara, Y. (2013a). International trade openness and inflation in Asia. Research in World Economy, 4(1), 22-28.
Kurihara, Y. (2013b). Effects of exchange rate fluctuations and financial development on international trade: Recent experience. International Journal of Business, Management and Economics Research, 4(5), 793-801.
Kurtovic, S., Halili, B., & Maxhuni, N. (2017). Bilateral trade elasticity of Serbia: Is there a J-curve effect? PSL Quarterly Review, 70, 185-196.
Lin, S., Shi, K., & Ye, H. (2018). Exchange rate volatility and trade: The role of credit constraints. Review of Economic Dynamics, 30, 203-222. http://dx.doi.org/10.1016/j.red.2018.05.002
Lourenco, L. S., and Vasconcelos, C. R. F. (2019). Impacts of exchange rate non-linearity on Brazilian foreign trade. International Economics and Economic Policy, 16(4), 679-699.
Mahmood, H., Al Khateeb, T. T. Y., & Ahmad, N. (2017). Impact of devaluation on industrial exports in Saudi Arabia: J-curve analysis. Actual Problems of Economics, 189(3), 331-341.
Moslares, C., and Ekanayake, E. M. (2018). The effect of real exchange rate volatility on exports on exports in the Baltic region. International Journal of Business and Finance Research, 12(1), 23-38.
Obstfeld, M., and Rogoff, K. (2007). The unsustainable U.S. current account position revisited. In: G7 current account imbalances: Sustainability, and adjustment. University of Chicago Press, 339-376.
Paternesi, M. W. (2018). Italy’s price competitiveness: An empirical assessment through export elasticities. Italian Economic Journal, 4(3), 421-462.
Pino, G., Tas, D., & Sharma, S. C. (2016). An investigation of the effects of exchange rate volatility on exports in East Asia. Applied Economics, 48(25-27), 2397-2411.
Pizada, A. (2019). Do exchange rate shocks matter for Pakistan’s export performance? Bristol Economics Discussion Papers.
Rose, A. K. (2018). Currency Wars? Unconventional monetary policy does not stimulate exports. NBER Working Papers, 24817.
Sasaki, Y. and Yoshida, Y. (2018). Decomposition of Japan’s trade balance. International Review of Economics and Finance, 56, 507-537. http://dx.doi.org/10.1080/09638199.2017.1391322
Sun, W., and Kim, G. (2018). Assessing the effects of exchange rate depreciation on the U.S. economy: Evidence from a factor-augmented VAR model. Journal of Economic Studies, 45(6), 1242-1271.
Wang, Y. (2018). Effects of exchange rate and income on the US bilateral trade with China under Chinese managed floating exchange rate system. Journal of Chinese Economic and foreign Trade Studies, 11(3), 236-246.
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Published
2020-04-25
How to Cite
Kurihara, Y. (2020). Has the exchange depreciation contributed to exports? The Japanese case. Archives of Business Research, 8(4), 47–54. https://doi.org/10.14738/abr.84.8073
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