Declining Japanese Yen in the Changing International Monetary System

26 Pages Posted: 12 Jan 2018

See all articles by Eiji Ogawa

Eiji Ogawa

Hitotsubashi University

Makoto Muto

Hitotsubashi University

Date Written: December 30, 2017

Abstract

The US dollar has kept as a position of key currency in the global economy in the changing international monetary system where the euro was introduced to some states of the EU in 1999. It is an evidence of inertia of the US dollar as a key currency. Our previous study (Ogawa and Muto, 2017b) conducted empirical analysis to investigate effects of several events on inertia of the US dollar. One of our findings was that the introduction of the euro increased utility of euro while utility of US dollar was kept unchanged. This paper examines the effects of the global financial crisis and the euro zone crisis as well as the introduction of the euro on the utility of the Japanese yen. The introduction of the euro significantly decreased the utility of the Japanese yen. It indicates that the introduction of the euro increased the utility of the euro while reducing the utility of the Japanese yen rather than the utility of the US dollar. The utility of the Japanese yen has significantly decreased while the global financial crisis and the euro zone crisis occurred. The Japanese yen has a declining trend in terms of its utility over time in the changing international monetary system.

Keywords: Japanese Yen, Utility of International Currency, Introduction of the Euro, Global Financial Crisis, Money-in-the-utility Function

JEL Classification: F33, F41, G01

Suggested Citation

Ogawa, Eiji and Muto, Makoto, Declining Japanese Yen in the Changing International Monetary System (December 30, 2017). East Asian Economic Review Vol. 21, No. 4 (December 2017) 317-342, http://dx.doi.org/10.11644/KIEP.EAER.2017.21.4.333, Available at SSRN: https://ssrn.com/abstract=3100531 or http://dx.doi.org/10.2139/ssrn.3100531

Eiji Ogawa (Contact Author)

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

Makoto Muto

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

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