Real Exchange Rates and Productivity Growth in the United States and Japan PDF Download
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Author: Richard C. Marston
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Real exchange rates between the yen and dollar based on general price indexes overestimate the competitiveness of the United States relative to Japan. High productivity growth in the traded sector of the Japanese economy results in a continuous fall in the prices of traded goods relative to nontraded goods in Japan. In order to keep U.S. traded goods competitive, the real exchange rate based on general price series like the GDP deflator or the CPI index must continually fall resulting in a real appreciation of the yen.This paper provides estimates of how far real exchange rates based on general price series would have had to fall over the 1973-83 period in order to keep U.S. traded goods competitive. The real exchange rate based on GDP deflators, for example, would have had to fall by 38% relative to the real exchange rate based on unit labor costs in the traded sector. The GDP series remained roughly constant over the period, thus giving the misleading impression that U.S. goods were still competitive despite a sharp rise in the relative price of U.S. traded goods. The paper also provides estimates of the relative wage changes which would have to occur to restore the competitiveness of U.S. traded goods
Author: Richard C. Marston
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Real exchange rates between the yen and dollar based on general price indexes overestimate the competitiveness of the United States relative to Japan. High productivity growth in the traded sector of the Japanese economy results in a continuous fall in the prices of traded goods relative to nontraded goods in Japan. In order to keep U.S. traded goods competitive, the real exchange rate based on general price series like the GDP deflator or the CPI index must continually fall resulting in a real appreciation of the yen.This paper provides estimates of how far real exchange rates based on general price series would have had to fall over the 1973-83 period in order to keep U.S. traded goods competitive. The real exchange rate based on GDP deflators, for example, would have had to fall by 38% relative to the real exchange rate based on unit labor costs in the traded sector. The GDP series remained roughly constant over the period, thus giving the misleading impression that U.S. goods were still competitive despite a sharp rise in the relative price of U.S. traded goods. The paper also provides estimates of the relative wage changes which would have to occur to restore the competitiveness of U.S. traded goods
Author:
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Category :
Languages : en
Pages :
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Book Description
Author: Richard C. Marston
Publisher:
ISBN:
Category : Foreign exchange
Languages : en
Pages : 34
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Book Description
Author: Mr.Hamid Faruqee
Publisher: International Monetary Fund
ISBN: 1451851359
Category : Business & Economics
Languages : en
Pages : 40
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Book Description
This paper examines the long-run determinants of the real exchange rate from a stock-flow perspective. The empirical analysis estimates a long-run relationship between the real exchange rate, net foreign assets and other factors affecting trade flows. Using postwar data for the United States and Japan, cointegration analysis supports the finding that the structural factors underlying each country’s net trade and net foreign asset positions determine the long-run path for the real value of the dollar and the yen. The empirical analysis also provides estimates for the underlying stochastic trend in each real exchange rate series.
Author: Man-Keung Tang
Publisher: International Monetary Fund
ISBN: 145185725X
Category : Business & Economics
Languages : en
Pages : 41
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Book Description
We revisit the time-honored link between productivity and the real exchange rate. Consistent with the traditional view, we find that higher labor productivity tends to lead to appreciation of the real exchange rate. Contrary to the traditional view, however, we find that the positive productivity effect is transmitted through the real exchange rate based on tradable prices, rather than through relative prices between tradables and nontradables. Moreover, higher total factor productivity is found, if anything, to lead to depreciation of the real exchange rate. These last two pieces of evidence provide support for the emerging view that limited tradability of goods and services provides scope for the strategic pricing decision, which has material consequences for the aggregate real exchange rate.
Author: Mr.Bankim Chadha
Publisher: International Monetary Fund
ISBN: 1451855338
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
This paper analyzes the relationship between the real exchange rate and the business cycle in Japan during the floating rate period. A structural vector autoregression is used to identify different types of macroeconomic shocks that determine fluctuations in aggregate output and the real exchange rate. Relative nominal and real demand shocks are found to be the main determinants of variation in real exchange rate changes, while relative output growth is driven primarily by supply shocks. Historical decompositions suggest that the sharp appreciations of the yen in 1993 and 1995 and its subsequent depreciation can be attributed primarily to relative nominal shocks.
Author: Ronald I. McKinnon
Publisher: MIT Press
ISBN: 9780262133357
Category : Business & Economics
Languages : en
Pages : 288
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Book Description
Dollar and Yen analyzes the friction between the United States and Japan from the viewpoint of exchange rate economics. From the mid-1950s to the early 1990s, Japan grew faster than any other major industrial economy, displacing the United States in dominance of worldwide manufacturing markets. In the 1970s and 1980s, many books appeared linking the apparent decline of the United States in the world economy to unfair Japanese practices that closed the Japanese market to a wide range of foreign goods. Dollar and Yen analyzes the friction between the United States and Japan from the viewpoint of exchange rate economics. The authors argue against the prevailing view that the trade imbalance should be corrected by dollar depreciation, saying that adjustment through the exchange rate is both ineffective and costly. Stepping outside the traditional dichotomy between international trade and international finance, they link the yen's tremendous appreciation from 1971 to mid-1995 to mercantile pressure from the United States arising from trade tensions between the two countries. Although sometimes resisted by the Bank of Japan, this yen appreciation nevertheless forced unwanted deflation on the Japanese economy after 1985--resulting in two major recessions (endaka fukyos). The authors argue for relaxing commercial tensions between the two countries, and for limiting future economic downturns, by combining a commercial compact for mutual trade liberalization with a monetary accord for stabilizing the yen-dollar exchange rate.
Author: William H. Branson
Publisher:
ISBN:
Category : Foreign exchange
Languages : en
Pages : 76
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Book Description
In the spring of 1981 the U.S. dollar began a four-year period of real appreciation that took it to a peak of more than 50 percent by first quarter 1985. Since then, the dollar has depreciated substantially, but remains above its 1980 level. During the same period, the Japanese yen first depreciated by 12 percent in real terms from 1981 to 1982, and then appreciated by some 30 percent to 1986. These swings in real exchange rates effects on the relative competitiveness of U.S. and Japanese industry, and have effects on employment and output in sectors producing tradeable goods. This paper presents estimates of these effects. Using time series data for the period 1970 to 1986, we use a simple model of supply and demand to estimate the impact of swings in the effective real exchange rate of the dollar and the yen on manufacturing employment and output in the U.S. and Japan, disaggregated by industry sectors, and by production and non-production workers in the case of the U.S. employment. These results are part of a larger research project to estimate the effects of the movements in the real exchange rate on world manufacturing industries. We find significant and substantial effects of the dollar appreciation on employment and output in U.S. manufacturing. In particular, we find that exchange rate movements have had important effects on the durable goods sectors, including primary metals, fabricated metal products, and non-electrical machinery. Other sectors that suffer large employment and output losses when the dollar appreciates are stone, clay and glass products, transportation, instruments, and chemicals. Estimates are also presented for non-production and production workers in the U.S. employment of the latter is more sensitive to the real exchange rate, especially in the durable goods sectors. This suggests the possibility of hysteresis in trade. For Japan, we find significant effects of movements in the yen on employment and output in the durable goods sectors, especially those producing machinery. In particular, yen appreciation causes substantial losses in employment and output in fabricated metal products, general machinery, and electrical machinery. The results for Japan are not as clear as for the U.S., perhaps because we have only annual data for Japan, but quarterly data for the U.S. Nevertheless, the importance of movements in the real exchange rate for employment and output in manufacturing is evident in both cases.
Author: Richard C. Marston
Publisher:
ISBN:
Category : Foreign exchange
Languages : en
Pages : 60
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Book Description
Many recent studies have documented the random behavior of real exchange rates. This paper shows that real exchange rates defined for different sectors of an economy move closely together with one another even though each of the sectoral real exchange rates taken alone has a large random component. The sectoral real exchange rates are tied together by internal price links due to factor mobility within each national economy. Any differences between real exchange rates which develop, moreover, can be explained almost entirely by productivity differentials, at least in the long run. This paper contrasts the strong ties which bind together prices from different sectors internally with ties that bind the prices of goods from the same sector internationally. Prices are shown to be much more highly correlated internally than externally because flexible exchange rates disrupt normal pricing relationships between goods from different countries.
Author: Charles R. Hulten
Publisher: University of Chicago Press
ISBN: 0226360601
Category : Business & Economics
Languages : en
Pages : 460
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Book Description
Emerging from the ruins of the Second World War, the Japanese economy has grown at double-digit rate throughout much of the 1950s and 1960s, and, when the oil crisis of the 1970s slowed growth throughout the industrialized world, Japanese growth throughout the industrialized world, Japanese growth rates remained relatively strong. There have been many attempts by scholars from a wide range of disciplines to explain this remarkable history, but for economists interested in the quantitative analysis of economic growth and the principal question addressed is how Japan was able to grow so rapidly. The contributors focus their efforts on the accurate measurement and comparison of Japanese and U.S. economic growth. Assuming that any sustained increase in real GNP must be due either to an increase in the quantity of capital and labor used in production or to the more efficient use of these inputs, the authors analyze the individual contributions of various factors and their importance in the process of output growth. These essays extend the methodology of growth analysis and offer many insights into the factors leading to the superior performance of the Japanese economy. They demonstrate that growth is a complex process and no single factor can explain the Japanese 'miracle.'
