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The Short- and Long-Run Effects of Exchange Rate Changes on the Japanese Electronics Industry

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  • THORBECKE, Willem

Abstract

The value of Japanese electronics exports has tumbled since the advent of the Global Financial Crisis, largely because export prices have fallen. This paper presents evidence that the appreciation of the yen between 2007 and 2011 caused yen export prices for electronics goods to fall by more than 20%. Yen export prices fell much more then yen costs over this period, implying that profit margins have been squeezed. This paper also reports that, in the long run, a 10% appreciation of the yen will reduce the volume of electronics exports by 10%. Japanese firms could mitigate the adverse impact of the strong yen by producing innovative products rather than competing based on price in commoditized industries.

Suggested Citation

  • THORBECKE, Willem, 2012. "The Short- and Long-Run Effects of Exchange Rate Changes on the Japanese Electronics Industry," Discussion papers 12019, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:12019
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    References listed on IDEAS

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    Cited by:

    1. Thorbecke, Willem, 2014. "The contribution of the yen appreciation since 2007 to the Japanese economic debacle," Journal of the Japanese and International Economies, Elsevier, vol. 31(C), pages 1-15.
    2. Ansgar Belke & Ulrich Volz, 2020. "The Yen Exchange Rate and the Hollowing Out of the Japanese Industry," Open Economies Review, Springer, vol. 31(2), pages 371-406, April.
    3. Nguyen, Thi-Ngoc Anh & Sato, Kiyotaka, 2019. "Firm predicted exchange rates and nonlinearities in pricing-to-market," Journal of the Japanese and International Economies, Elsevier, vol. 53(C), pages 1-1.
    4. Francesco Aiello & Graziella Bonanno & Alessia Via, 2015. "New Evidence on Export Price Elasticity from China and Six OECD Countries," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(6), pages 56-78, November.
    5. Baak, SaangJoon, 2014. "Do Chinese and Korean products compete in the Japanese market? An investigation of machinery exports," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 256-271.
    6. Pasrun Adam & Pasrun Adam & Rosnawintang Rosnawintang & Ambo Wonua Nusantara & Abd Aziz Muthalib, 2017. "A Model of the Dynamic of the Relationship between Exchange Rate and Indonesia's Export," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 255-261.
    7. Francesco Aiello & Graziella Bonanno & Alessia Via, 2014. "Do Export Price Elasticities Support Tensions In Currency Markets? Evidence From China And Six Oecd Countries," Working Papers 201405, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.

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