Has the yen depreciation of recent years improved Japan’s trade balance? Testing the J-curve effect

Akihiro Kubo

Applied Economics Letters, 2023, vol. 30, issue 10, 1293-1297

Abstract: This study investigates the existence of the J-curve effect in Japan for the most recent sample period, for which there is a continuation of the weak trend in the yen. The results failed to confirm the existence of the J-curve effect in national Japanese data. However, the J-curve effect explains the time lag between yen depreciation from the end of 2012 and improvement in the trade balance in 2015 in the Kansai region, in which only a relatively small proportion of exports can be attributed to the automotive industry with using the pricing strategies. Specifically, the empirical result suggested that the period from August 2013 to July 2014 formed the dip in the J-curve, and it matches actual relevant movements.

Date: 2023
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DOI: 10.1080/13504851.2022.2047587

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