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The Effect of Exchange Rate Changes on Japanese Consumption Exports
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Abstract
This paper investigates how exchange rates affect Japanese exports. This is difficult because many of Japan’s exports are used to produce goods for re-export. An appreciation in the importing country that decreases exports can decrease its imported inputs from Japan. To correct for this bias the authors examine consumption exports. Using a panel dataset of Japan’s consumption exports to 17 countries over the 1988–2009 period, they found that a 10% appreciation of the yen would reduce Japan’s consumption goods exports by 9%. These results indicate that the large swings in the value of the yen over the last decade have caused large swings in the volume of Japanese exports.exchange rate elasticities; japanese consumption exports