Abenomics' Trade Spillover

Date: October 2013
Type: Papers and Briefs
Subject:
Series: Economics Working Papers
ISSN: 1655-5252 (print)
Author: Ferrarini, Benno

Description

The paper assesses the impact on Japan's competitors from a marked fall in the value of yen. Competing exporters are likely hurt by a cheaper yen, except those relying heavily on Japanese parts and components for their exports. This paper formalizes this intuition and tests it against a data set covering more than 90% of world trade at the product level, between 2000 and 2011. Panel regression analysis shows that, for countries and products facing Japan’s strongest competition, a 10% appreciation of the yen lowers average exports by more than 3%, which is a sizeable pass through. Elsewhere, the impact is negligible, particularly when parts and components trade is accounted for.

Contents

  • Abstract 
  • Introduction 
  • Empirical Framework 
  • Data 
  • Competing with Japan in the Global Goods Markets 
  • Estimates of Yen's Trade Spillover 
  • Conclusions 
  • Appendix 
  • References