Weaker Yen Essay

Increase in price: The recent deflation in Japan’s economy has brought paper used for commercial products and home offices to skyrocketing prices. In just the past five months, paper has totaled an increase of 25% of its original price value. Paper producing companies are setting high prices because the value of the yen has dropped and the import costs have risen. Since there are few substitutions for paper and many people need them for daily uses, the demand would be inelastic to the price increase. Companies could therefore produce more paper and gain a higher profit than before. Although demand would theoretically be higher, the economy would not improve much if the companies are not willing to raise their employee’s wages. Income plays a huge role in demand, for few people, if any, would buy products that they could not afford. In addition, as time passes, people would find or develop a substitute for paper, and the demand and quantity supplied would

This could create a hole in Nando’s income if unemployment rises. Exchange rates could have a significant effect on Nando’s globally as if one country is in recession the value of money drops so when one country’s moneys expressed to another country’s it could only have little value making great loss to Nando’s.

Although Japan changed in many ways from 1853 to 1941, there were also many factors that remained the same throughout the history of Japan. One such continuity was the maintained existence of a figurehead ruler controlled by other political authorities. The feudalistic emperor of Japan was the supposed “highest, most powerful authority” in the land, but was actually controlled by the military leaders- the shogun. Similarly, the militaristic emperor of Japan decades later continued to remain a figurehead ruler controlled by military and government officials. In addition, Japan continued to remain reliant on exports in order to maintain its economy. As a result of Japan’s small geographical size, the island nation had few natural resources and was forced to rely on exports to survive economically. The nation also grew increasingly reliant on other nations to provide materials and supplies that it could not provide for itself. This complete reliance on other nations was seen illustrated when the Japanese military was provoked to attacking another superpower- the United States, in response to the 1940 United States embargo

The main challenge about trade is the long-term condition of Japan. Although Japan performs well now, it is a receding market. There is a significant challenge for Japan in the future. It is facing a dwindling work population, as the average populace gets older. This provides a serious risk as if the workforce reduces in size so does the production. And production is one of the main factors that make Japan wealthy. In addition, even though it is the second largest economy in the world it will face high expenditure. This is a serious issue if not properly taken care of. However, a country with one of the highest GDP’s in the world is unlikely to mistreat

Currency: Japan uses the Yen, as The United States Uses the dollar. Exchange Rate 12/31/04 US=$1 and Yen = 110.5. Gross Domestic Product (GDP, at market exchange rate) $4.8 trillion for Japan and for the United States it is $11.50 trillion for 2004. Inflation Rate (consumer prices) Japan actually as a deflation of -0.4% as the United States as a inflation rate of 1.90%. Current Account Balance (2004F): $174.1 billion for Japan and the United States is 187.9 billion .Major Trading Partners for both countries.: Germany, Asian NIEs, China, OPEC Merchandise Exports (2004F): $522.4 billion for Japan and $630.57 billion for the United States. Merchandise Imports (2004F): $395.9 billion for Japan and 647 billion for United States. Merchandise Trade Surplus (2004F): $126.5 billion for Japan and for the United States it is $167 billion. Major Export Products for Both Countries: Machinery and transport equipment; chemical and other manufactured goods Major Import Products both countries: Chemical and other manufactured goods; machinery and transport equipment; mineral

Japan’s unemployment rate of about 4% opposed to the U.S. unemployment rate of close to 10%. Even the financial debt to GDP ration is an advantage, and debt in the private sector has not increased unlike the U.S. and European countries, (Time, 2009). In addition, since Japan is a huge exporter and with the U.S. demand going downward, the international balances and growth declined especially as the dollar value dropped and the yen surged. •

First being a balanced budget, followed by suspension of new loans from the Reconstruction Finance Bank (this source of supply of money was identified as the root cause of inflation), and lastly, reducing as well as completely eliminating subsidies. The above-mentioned policies were identified to aid in accelerating the Japanese economy. Dodge’s policies caused problems along the way in its implementation but it created a path for recovery without the help of America. The Japanese were encouraged to economize and accumulate capital through such a policy.

Abenomics has ‘Three Policy Arrows’ targeting Monetary Policy, Fiscal Policy and structural reform strategies to spur economic growth and encourage private investment.’ Seeking to target inflation at 2% annual rate, correcting the yen appreciation against the Dollar, introduction of negative interest rate, increasing government spending are part of the

In 1945, Japan was devastated and lost a quarter of the national wealth after suffering a defect in the second world war. A majority of the commercial buildings and accommodation had been demolished, and massive machinery and equipment formerly used in production for the civil market were out of service to provide metal for military supplies (Miyazaki 1967). Despite the trash and ruins had left over in Japan, Japan was able to rebuilding its infrastructure and reconstruct their economy. It is revealed that the Japanese economy was on its way to recovery, which received a rapid development since the war, and the reconstruction of Japan had spent less than forty years to become the world’s second largest economy in the 1980s. This essay will explore the three factors account for the economic growth of post-war Japan: the financial assistance from the United States, the external environment, and the effective policy of Japanese government.

The deregulation of financial markets catalysed by Globalisation worldwide has impacted on the amount of trade within the Japanese economy beneficially allowing easier access to foreign currencies, facilitating a higher flow of goods between nation, by relaxing laws that severely prevented foreign buying of currency, and floating the yen. These drivers have helped boost Japan's trade and recovery from its recession. Technology has allowed finances to be traded and communication to be near to instantaneous. This has increased dramatically the amount of FDI into Japan largely thanks to the numerous strategies the Japanese government has taken to promote economic growth and hence development. Finance and Foreign Direct Investment (FDI) have increased as a direct result of globalisation doubling from $63 billion in 2001 to $144 billion in

The onset of Super Endaka in 1995 summed up to an already existing situation of global recession (1991), with price pressures, posted production and sales declines. Moreover, trade barriers in Europe prevented Japan's firms to expand and compensate for the US losses, where the price effects of yen appreciation were most severe. This time, the challenge posed by the new exchange rate shift was even harder than the first one.

* A fall in price is very harmful- During a long period of deflation and very low inflation, the Japanese economy has suffered lower growth because of deflationary pressures. When prices are falling people are not interested to spend money because they are concerned that prices will

The impact of the intervention was immediate and within two years the dollar had fallen relative to Germany Deutsche mark and relative to the Yen. The Us Economy also became geared more toward exports, while Germany and Japan increased their imports too. This helped resolve the current account deficits and helped to minimise protectionist policies. However, among the G-5 nations Japan was badly affected, from the Plaza Accord, by the dramatic rise in the Yen it’s exporters unable to remain competitive overseas and Japan also experienced the economic crisis following the Japanese asset price bubble during the 1990s called the Lost

Japan ranks as the third largest economy in the world as of 2010. The GDP at current prices in US dollars in Japan was reported at 5068.06 billion in 2009, according to the International Monetary Fund (IMF). Japan’s resurgence after World War II has however reached an inflection point in yearly 1989 after the burst of Japan’s asset price and real estate bubbles. As can be seen from the graph below, Japan’s GDP has hovered around the same level through more than 20 years of economic stagnation. The GDP’s slow growth has been exacerbated by the world financial crisis of 2008. A major landmark of Japan’s stagnation has been the BOJ’s fight against deflation.

The Bank of Japan’s (BOJ) near doubling the purchase of shares belonging to Tokyo is making the investors to have worries on the central bank that it will dominate the financial markets , which will cause price distortions as it goes on greasing the economy. The Bank of Japan’s purchasing spree will make it harder for the investors to sift those companies which are good and those which are bad, and comes up with a lot of other problems such as making trading of equities to be more speculative, misallocation of capital and decreasing incentives for the