Revisiting Japans External Adjustment Since 1985

Download or read book Revisiting Japan's External Adjustment Since 1985 written by Mr.Guy Meredith and published by International Monetary Fund. This book was released on 1993-06-01 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: The factors that explain Japan’s external performance since the mid-1980s are controversial. While the current account surplus eventually declined following exchange rate changes in 1985-86, a widening since 1990 has led to renewed scepticism about the role of relative price movements in bringing about external adjustment. This paper revisits the post-1985 experience to determine whether it can be explained by traditional factors. The results indicate that, over the period as a whole, the behavior of trade volumes and prices was similar to that predicted by traditional relationships. In particular, relative price movements played an important role in reducing the surplus: in their absence, it would have widened further.