1/4
A weaker yen boosts growth in the short term by subsidizing exports, but because households, who are net importers, ultimately pay for that subsidy, it reduces growth in the long term by undermining the much-needed rebalancing towards domestic demand.
ft.com
A weaker yen boosts growth in the short term by subsidizing exports, but because households, who are net importers, ultimately pay for that subsidy, it reduces growth in the long term by undermining the much-needed rebalancing towards domestic demand.
ft.com
2/4
China should study Japan to learn what not to do. For thirty years Tokyo promised to rebalance demand and boost domestic consumption, but its excess reliance on exports – and perhaps the political power of exporters – has prevented it from taking the necessary steps to do so.
China should study Japan to learn what not to do. For thirty years Tokyo promised to rebalance demand and boost domestic consumption, but its excess reliance on exports – and perhaps the political power of exporters – has prevented it from taking the necessary steps to do so.
3/4
The problem is that greater export competitiveness and stronger domestic demand are conflicting objectives. The former requires that households retain a lower share of what they produce. The latter requires a sharp increase in the household share of GDP.
The problem is that greater export competitiveness and stronger domestic demand are conflicting objectives. The former requires that households retain a lower share of what they produce. The latter requires a sharp increase in the household share of GDP.
4/4
Depreciating the yen supports the former but subverts the latter. A long-term return to growth requires reversing subsidies to the export sector, but this cannot help but undermine short-term growth. Tokyo, like Beijing soon enough, must choose.
Depreciating the yen supports the former but subverts the latter. A long-term return to growth requires reversing subsidies to the export sector, but this cannot help but undermine short-term growth. Tokyo, like Beijing soon enough, must choose.
Japanese yen real effective exchange rate.
2010 = 100
2010 = 100
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