Abenomics' Trade Spillover
The paper assesses the impact on Japan’s competitors from a marked fall in the value of yen. For countries and products facing Japan’s strongest competition, a 10% appreciation of the yen lowers average exports by more than 3%.
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.
- Empirical Framework
- Competing with Japan in the Global Goods Markets
- Estimates of Yen's Trade Spillover