Journal Article

In brief: understanding the rising Japanese trade surplus

Abstract: Intuition suggests that a strengthening of the yen should moderate Japan's trade surplus by reducing the price competitiveness of Japanese goods. Yet the Japanese merchandise trade surplus more than doubled from 1990 to 1993 while the yen appreciated roughly 30 percent against the dollar. This article shows how a sequence of increases in the yen's value repeatedly pushed the trade surplus higher, delaying the downward adjustment that eventually results from a yen appreciation. Once the yen stabilizes, the author suggests, the surplus should fall significantly.

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Quarterly Review

Publication Date: 1994

Volume: 19

Issue: Spr

Pages: 34-37