Intuition suggests that a strengthening of the yen should moderate Japan's trade surplus by reducing the price competitiveness of Japanese goods. Yet the Japanese merchandise trade surplus more than doubled from 1990 to 1993 while the yen appreciated roughly 30 percent against the dollar. This...

Despite a steep drop in the dollar's value, imports continued to grow much faster than domestic sales after 1985. The resilience in the demand for imports raised concern that foreign producers in the first half of the 1980s had gained long-term advantages in U.S. markets that diminished the...