This paper investigates how exchange rates affect Japanese exports. This is difficult because many of Japan's exports are used to produce goods for re-export. An appreciation in the importing country that decreases exports can decrease its imported inputs from Japan. To avoid this bias we examine consumption exports. Using a panel dataset of Japan's consumption exports to 17 countries over the 1988-2009 period, we find exchange rate elasticities of about one. These results indicate that the large swings in the value of the yen over the last decade have caused large swings in the volume of Japanese exports.
- Exchange rate elasticities
ASJC Scopus subject areas
- Economics and Econometrics
- Political Science and International Relations