Yen Exchange Rate And The Stability Of Japanese Economy And Trade

In our International observation and comparison, we found that China has encountered a lot of trade, exchange rate pressures and accusations, very similar to issues encountered by Japan in the seventies and eighties of the20th century. This thesis aims to answer the following questions through a series of refined literature: Why did not the sharp appreciation of the Yen hamper the Japan External Trade? What exactly the kind of impact to the economy does structural changes of the Japan external trade would make?The thesis starts from the exchange rate policy of Japan, after introducing the real effective exchange rate of Yen, discovers the impact of real effective exchange rate on trade in general, on different types of trade categories, and on the real economy. In particular, the thesis originally introduces Japan’s trade Classification and carries out VAR test to examine the impact of Yen real effective exchange rate on the trade structure, and explains why the appreciation of the Yen does not devastatingly destroyed the Japanese economy. In our final conclusion, real effective exchange rate changes does destroy a trade with less flexibility, and the Japanese economy was negatively affected by the appreciation of Yen, but not devastatingly, due to the adjustment of industrial structure and trade structure upgrade,Through theoretical and empirical analysis of a series of real effective exchange rate against the Yen on the Japanese economy and trade stability, we hope the thesis can play some reference to the appreciation of the RMB.