The accumulation of income balance and its relationship with real exchange rate: Evidence from Japan

Takahiro Hattori, Ayako Tomita and Kohei Asao
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Takahiro Hattori: Project Assistant Professor, University of Tokyo and Visiting Scholar, Policy Research Institute, Ministry of Finance, Japan
Ayako Tomita: Former Senior Economist, Policy Research Institute, Ministry of Finance, Japan
Kohei Asao: Visiting Scholar, Policy Research Institute, Ministry of Finance, Japan

Discussion papers from Policy Research Institute, Ministry of Finance Japan

Abstract: Recently, income balance has been gaining importance in current accounts among many countries. We assess the effect of the real effective exchange rate (REER) on income balance using Japan-specific data and multi-country data. Our results show that the REER does not affect income balance, both on gross and net basis. We also show that accumulation of net foreign assets, driven by the glocalization h of Japanese manufacturing firms, has fostered the income balance surplus in Japan.

Keywords: Current account; Income account; International investment position; Exchange rates; Japan (search for similar items in EconPapers)
JEL-codes: F1 F32 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2023-01
New Economics Papers: this item is included in nep-int and nep-opm
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https://www.mof.go.jp/pri/research/discussion_paper/ron351.pdf First version, 2016 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mof:wpaper:ron351

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