This paper presents an empirical analysis of the macroeconomic and microeconomic factors underlying the causes and persistence of the U.S. external deficit in the 1980s. The paper begins with a review of the extensive literature on this subject, and then outlines an analytical framework that...

An estimation of the costs and benefits that dollar depreciation imposes through changes in the prices of imports and exports, and through changes in the potential purchasing power of U.S. international assets and liabilities.

The Japanese auto industry is used as a case in point to illustrate some of the ways in which firms operating in export markets cope with exchange-rate changes.