Determinants of German and Japanese Exports: A Comparative Study

George K. Zestos (), Yixiao Jiang () and Clifton Painter ()
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George K. Zestos: Christopher Newport University, USA, Postal: Jean Monnet Chair and Professor of Economics, Department of Economics, Christopher Newport University, 1 Avenue, of the Arts, Newport News, VA, 3606, USA.
Yixiao Jiang: Christopher Newport University, USA, Postal: Assistant Professor of Economics. Christopher Newport University, 1 Avenue of the Arts, Newport News, VA, 3606,, USA.
Clifton Painter: Christopher Newport University, USA, Postal: Research Assistant Christopher Newport University Summer Scholar for George K. Zestos, 1 Avenue of the Arts,, Newport News, VA, 3606, USA.
Authors registered in the RePEc Author Service: Yixiao Jiang and Yixiao Jiang

Journal of Economic Integration, 2021, vol. 36, issue 3, 339-371

Abstract: This study investigates the determinants of German and Japanese exports in a comparative fashion. By estimating an autoregressive distributed lag model for each country, we find that the income elasticity of Japanese exports is three times as large as that of Germany’s exports. This relative insensitivity to external demand explains why Germany has maintained its export growth whereas Japanese exports started to stagnate after the global financial crisis. Because Germany adopted the euro in 1999, it was able to maintain large trade surpluses. If Germany had instead kept the Deutsche Mark (DM), the DM would have appreciated owing to the Central Bank of Germany’s consistent preference for a tight monetary policy, and Germany’s trade surpluses would have dissipated. A sharp increase in Japanese foreign direct investment after 2011 has also played a role in reducing Japanese exports after the global financial crisis.

Keywords: Autoregressive distributed lag model; Export-led growth; Cointegration; Economic development (search for similar items in EconPapers)
JEL-codes: C22 F14 F15 O57 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0830

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