The Study Of Japanese Yen Appreciation Trend And Internal And External Economic Equilibrium In Japan

This paper systematically analyzes the impact of Yen appreciation on its internal and external economic equilibrium by discussing how the rise of Yen-Dollar exchange rates affects its foreign trade, FDI, commodity prices, interest rates and the internal and external equilibrium. By using the abundance official figures and materials released by the Japanese government since its adoption of float exchange rate (1971～2003),the paper makes a systematic and empirical analysis on Japanese foreign trade situation, capital assets prices and internal and external equilibrium from macroscopic and microscopic aspect respectively. Some valuable conclusions are drawn on such bases.Chapter One, posing problem, is an introduction of the research background, significance, the definition of related concept and the thoughts. Under the appreciation pressure of Chinese RMB, it is crucial to study the effect caused by the Yen's exchange rate on China's economic development. Due to the similar economic situation between Japan and China when both currencies undergo appreciation respectively, the research has its unique theoretical value and practical significance. This paper makes a comprehensive economic analysis and empirical research of Yen appreciation in terms of Japanese international trade, capital assets prices and internal and external equilibrium.Chapter Two mainly studies the related theories and literature reviews of exchange rate. Besides, an abstraction of western exchange rate determination theories since the 20th century is rendered, including the theory of interest rate parity, balance of payments, capital market. Then we study the theories and its models of the relationship between interest rate and exchange rate; secondly, internal and external equilibrium and international finance coordination theories in the open economic conditions; last, the literatures about the floating of Yen's exchange rate.Chapter Three mainly studies the influences of the Japanese Yen appreciation on its foreign trade. Generally speaking, the relationship between the appreciation of currency and a country's foreign trade is mainly considered in terms of import and export. The initial analysis is focused on the relationship between the sharp appreciation of Yen after the Square Agreement and the following changes in Japanese foreign trade. By studying the economic historical facts and empirical research in terms of export, we analyze the fact why the Yen appreciation leaded to an increase in export. Secondly, we study the Yen appreciation and its balance between the internal and external price, and analyze the fact that the appreciation leaded to a stability of price in Japan in the terms of import. Thirdly, we study the change trend of Japan's general price level and individual consumption. At last, we analyze the impulse of Yen appreciation on Japan's foreign direct investment.Chapter Four is focused on the influences of Yen appreciation on its interest rate and asset prices. We first study the impacts of Yen appreciation on its market interest rate and long-term national debt market; second, the impacts of Yen appreciation on Japan's stock market; last, the relationship between Yen appreciation and the bubble of stock and real estate.Chapter Five mainly studies the effects of Yen appreciation trend on Yen's internal and external equilibrium. First, we analyze the influences of Yen appreciation on its balance of payments. The second part is an analysis of Japan's external equilibrium against the economic depression, and then, the internal equilibrium under the same economic condition.Chapter Six,the empirical analysis and the discussion of the test results, conducts empirical analysis of Yen appreciation effects on Japanese international trade and FDI. We also make empirical analysis on the interest rate of assets prices, real estate, prices of the stock market investment concerning interior- exterior balance and current account balance. Finally we verify the empirical conclusion and make further discussion on the results.Chapter Seven presents the conclusions and revelations of this paper. This part summarizes the whole idea of the paper.