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Investigating How Exchange Rates Impact Japan’s Machinery Exports since 1990

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  • Willem Thorbecke

    (Research Institute of Economy, Trade and Industry, Tokyo 100-8901, Japan)

Abstract

Japan exports sophisticated capital goods. Since the Global Financial Crisis (GFC), Japanese companies have offshored the production of lower-end goods and parts and components to Asian countries. Because of this, several researchers argued that a weaker yen no longer stimulates machinery exports much because an increase in Japanese exports increases parts and components imports from overseas Asian subsidiaries. This paper finds that, after the GFC, a weaker yen no longer increases Japanese machinery exports to Asia but continues to stimulate exports outside of Asia. Thus, the weaker yen since 2020 does not help Asian firms to import vital Japanese capital goods but does increase the profitability of Japanese manufacturers and their exports to non-Asian countries.

Suggested Citation

  • Willem Thorbecke, 2024. "Investigating How Exchange Rates Impact Japan’s Machinery Exports since 1990," Economies, MDPI, vol. 12(6), pages 1-12, May.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:6:p:133-:d:1403887
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    References listed on IDEAS

    as
    1. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
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    3. Sasaki, Yuri & Yoshida, Yushi & Otsubo, Piotr Kansho, 2022. "Exchange rate pass-through to Japanese prices: Import prices, producer prices, and the core CPI," Journal of International Money and Finance, Elsevier, vol. 123(C).
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    5. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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