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Abenomics’ Trade Spillover

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  • Ferrarini , Benno

    (Asian Development Bank)

Abstract

There is no escaping Japan’s competition in the world markets for goods, particularly in the automotive and electronics industries. Countries exporting to these markets are bound to feel the competitive pressure from a marked fall in the value of the yen. However, while some exporters will be hurt by a cheaper yen, others will benefit from lower input costs, to the extent that they source parts and components from Japan for processing, assembly, and reexport. This paper formalizes these intuitions and tests them against a data set covering more than 90% of world trade at the product level, between 2000 and 2011. Panel regression analysis shows that for countries and products facing Japan’s strongest competition, a 10% appreciation of the yen lowers average exports by more than 3%, which is a sizeable pass through. Elsewhere, the impact is negligible, particularly when vertical trade is accounted for.

Suggested Citation

  • Ferrarini , Benno, 2013. "Abenomics’ Trade Spillover," ADB Economics Working Paper Series 379, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0379
    Note: http://www.adb.org/sites/default/files/pub/2013/ewp-379.pdf
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    File URL: https://www.adb.org/publications/abenomics-trade-spillover
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    References listed on IDEAS

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    3. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
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    6. Benno Ferrarini, 2013. "Vertical Trade Maps," Asian Economic Journal, East Asian Economic Association, vol. 27(2), pages 105-123, June.
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    More about this item

    Keywords

    export competition; exchange rate spillover; Abenomics; Japan; Republic of Korea;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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