Economic Relations Between U.s. And Japan

1426 WordsMar 6, 20176 Pages
More and more many researchers have accepted the economic relationship between the U.S. and Japan as a subject worthy of academic consideration and evaluation, especially considering the continuously decreasing trade deficit of the U.S. Many believe several factors play a role in the United States’ relationship with Japan including both microeconomic and macroeconomic factors. Some of these include savings and investment rates as well as industry structure, barriers to trade and even the value of Japanese yen compared to the U.S. dollar. Researchers disagree on which ones affect the United States trade deficit the most however, each can agree that more than one factor plays a part in the declining economic relationship between the U.S. and…show more content…
jobs in 2013 alone. The value of the yen continues to decrease today, which makes it hard for U.S. exporters to be able to sell their products at a reasonable price which creates a trade deficit and affects the number of jobs available. Hogan (2015) studied the relationship between the Japanese yen and to U.S. dollar exchange rate. Over the past two decades, the yen has changed drastically. By 2011, the yen to dollar value was received to be 80 yen to/1 dollar. Hogan (2015) reviewed a simple example of how the U.S. to yen-dollar rates affects the production and selling of goods. In this example, Hogan (2015) took two Japanese automobile manufacturers. Company A in his experiment built its cars in Japan and exported them to the U.S. while company B has a factory in the U.S. and built their cars in the U.S. He found that if it cost company A 1.2 million yen (10,000 U.S. dollars) at a rate of 120 yen/ to 1 dollar and it costs company B 10,000 dollars to make the same model. Both companies sell their cars for 15,000 dollars and both would in return make a 5,000 dollar profit. However this would all change if the value of the yen strengthened. Once the value of yen strengthens it will cost more U.S. dollars to make or purchase a product. So Hogan (2015) altered his experiment and found that if the yen value strengthened and the yen to dollar ratio became 100 yen/ 1 dollar and it still cost company A 1.2 million yen to produce a car it will cost
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