Dollar and Yen: Resolving Economic Conflict between the United States and Japan

Dollar and Yen: Resolving Economic Conflict between the United States and Japan

by Ronald I. McKinnon, Kenichi Ohno
     
 

ISBN-10: 0262133350

ISBN-13: 9780262133357

Pub. Date: 06/13/1997

Publisher: MIT Press

From the mid-1950s to the early 1990s, Japan grew faster than any other major industrial economy, displacing the United States in dominance of worldwide manufacturing markets. In the 1970s and 1980s, many books appeared linking the apparent decline of the United States in the world economy to "unfair" Japanese practices that closed the Japanese market to a wide

Overview

From the mid-1950s to the early 1990s, Japan grew faster than any other major industrial economy, displacing the United States in dominance of worldwide manufacturing markets. In the 1970s and 1980s, many books appeared linking the apparent decline of the United States in the world economy to "unfair" Japanese practices that closed the Japanese market to a wide range of foreign goods.Dollar and Yen analyzes the friction between the United States and Japan from the viewpoint of exchange rate economics. The authors argue against the prevailing view that the trade imbalance should be corrected by dollar depreciation, saying that adjustment through the exchange rate is both ineffective and costly. Stepping outside the traditional dichotomy between international trade and international finance, they link the yen's tremendous appreciation from 1971 to mid-1995 to mercantile pressure from the United States arising from trade tensions between the two countries.
Although sometimes resisted by the Bank of Japan, this yen appreciation nevertheless forced unwanted deflation on the Japanese economy after 1985--resulting in two major recessions (endaka fukyos).The authors argue for relaxing commercial tensions between the two countries, and for limiting future economic downturns, by combining a commercial compact for mutual trade liberalization with a monetary accord for stabilizing the yen-dollar exchange rate.

Product Details

ISBN-13:
9780262133357
Publisher:
MIT Press
Publication date:
06/13/1997
Edition description:
New Edition
Pages:
276
Product dimensions:
6.10(w) x 9.10(h) x 1.00(d)
Age Range:
18 Years

Table of Contents

Preface ix
1 Introduction: The Syndrome of the Ever-Higher Yen
1(20)
2 Policy Causes and Postwar Origins of Japan-U.S. Economic Conflict: Differential Productivity Growth and the Saving Shortage in the United States
21(30)
3 Exchange-Rate Fluctuations and Their Consequences: Price Diffusion and Endaka Fukyo
51(22)
4 Balancing International Competitiveness in the Longer Run: Wage Adjustment versus Yen Appreciation
73(20)
5 The Transfer Problem and Macroeconomic Fluctuations: Endaka Fukyo, Bubbles, and Credit Crunches
93(32)
6 The Exchange Rate and the Trade Balance in Theorry: Insular versus Open Economies
125(18)
7 The Exchange Rate and the Japan-U.S. Trade Balance in Practice: A Critique of the Modern Elasticities Approach
143(20)
8 Monetary and Exchange-Rate Regimes, Inflation Persistence, and the Volatility of Long-term Interest Rates
163(14)
9 Price Deflation and Purchasing Power Parity: A Causality Analysis of Yen Appreciation and Japanese Monetary Policy
177(28)
10 Overcoming the Syndrome: Toward a U.S.-Japan Commercial Compact and Monetary Accord
205(18)
11 Is the Syndrome Over? The Fall of the Yen, 1995-96, and Its Implications for the Transition
223(14)
Notes 237(10)
References 247(10)
Index 257

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