Japan's Persistent Trade Surplus: Policies for Adjustment

Byron Gangnes (gangnes@hawaii.edu) and F. Gerard Adams

No 199404, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: While part of the recent increase in the Japanese trade surplus can be attributed to the Japanese recession, the surplus has widened despite the appreciation of the yen and enactment of policies to open Japanese markets. We review the trade surplus issue in the light of theories of trade and current account adjustment. We evaluate the potential for exchange appreciation and Japanese fiscal policy to reduce the imbalance, estimating their effects using simulations of the NIRA-LINK model of the US-Japan-world economy. The simulations show that moderate use of macropolicies would not be sufficient to eliminate the trade imbalance.

Keywords: Japanese trade surplus; econometric simulations (search for similar items in EconPapers)
JEL-codes: C53 F32 F47 (search for similar items in EconPapers)
Pages: 25 pages
Date: 1994
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Journal Article: Japan's persistent trade surplus: Policies for adjustment (1996)
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