The Accumulation of Income Balance and its Relationship with Real Exchange Rate: Evidence from Japan

11 Pages Posted: 30 Mar 2023

See all articles by Takahiro Hattori

Takahiro Hattori

University of Tokyo - Graduate School of Public Policy

Ayako Tomita

affiliation not provided to SSRN

Kohei Asao

affiliation not provided to SSRN

Abstract

Recently, income balance has been gaining importance in current accounts among many countries. We assess the effect of the real effective exchange rate (REER) on income balance using Japanese data. Our results show that the REER does not affect income balance, both on gross and net basis. We also show that accumulation of net foreign assets (NFAs), driven by the “localization” of Japanese manufacturing firms, has fostered the income balance surplus in Japan.

Keywords: Current account, Income account, International investment position, Exchange Rates, Japan

Suggested Citation

Hattori, Takahiro and Tomita, Ayako and Asao, Kohei, The Accumulation of Income Balance and its Relationship with Real Exchange Rate: Evidence from Japan. Available at SSRN: https://ssrn.com/abstract=4404736 or http://dx.doi.org/10.2139/ssrn.4404736

Takahiro Hattori (Contact Author)

University of Tokyo - Graduate School of Public Policy ( email )

Tokyo
Japan

Ayako Tomita

affiliation not provided to SSRN ( email )

No Address Available

Kohei Asao

affiliation not provided to SSRN

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