Long-Run Determinants of Japanese Exports to China and the United States: A Sectoral Analysis

Jacques Jaussaud (1) , Serge Rey (2)

1 CREG - Centre de recherche et d'études en gestion
2 CATT - Centre d'Analyse Théorique et de Traitement des données économiques

We show that during the period 1971–2007, Japanese sectoral exports to China and the United States have depended on real exchange rate fluctuations and external demand (gross domestic product of the country of destination). This result holds for six sectors: foods, textile, metal products, chemicals, non-metal products, and machinery and equipment, as well as for both geographical destinations. Generally, the real exchange rate fluctuations and GDP have had the expected effects. In particular, a real appreciation of the yen and a bigger uncertainty has reduced the Japanese exports. But there is an important exception, as we find a price inelasticity of the principal Japanese exports to USA, i.e. Machinery and Equipment, which represent 80 percent of total exports to USA. So, a real depreciation of the yen may constitute an inappropriate policy to favor a process of growth export-led.

Keywords: Exchange rate; Yen; International Trade; Exports; Long-run relationships; Japan

Domains: Economics and Finance

Jacques Jaussaud, Serge Rey. Long-Run Determinants of Japanese Exports to China and the United States: A Sectoral Analysis. 2009. ⟨hal-01880362⟩