Ryuhei Wakasugi, 27 November 2009

Japanese exports were hit particularly hard by the crisis. This chapter shows how tumbling US import demand hurt Japanese exports both directly and via indirect exports of goods assembled in China for the US market (the so-called “trade triad”). An investigation into the extensive and intensive margins during Japan’s recent trade collapse shows that most adjustment occurred in existing trade relationships; there is very little evidence of deeper harm to Japan’s export capability via damage to its international supply chain. That means the ongoing recovery of the US economy should produce an especially speedy revival of Japanese exports.

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