We use Japanese prefectural wage and land price data to estimate the magnitude of agglomeration effects in manufacturing and finance. We also examine the range of agglomeration effects by estimating the extent to which they diminish with distance, using a specification that encompasses the polar...

This paper uses a 42-country model of production and trade to assess the implications of eliminating current account imbalances for relative wages, relative GDPs, real wages, and real absorption. How much relative GDPs need to change depends on flexibility of two forms: factor mobility and...

In this paper, we revisit the issue of the impact of demographic change on the Japanese saving investment balance. Using updated government projections, we show that the ageing of the population under way will steadily lower Japan's saving rate from 31 per cent of GDP today to 20 per cent of GDP...

We incorporate trade imbalances into a quantitative model of bilateral trade in manufactures, dividing the world into forty "countries." We calculate the pattern of bilateral trade and relative factor costs in a counterfactual world with all current accounts balancing. Our results indicate that...

From 1989 to 2010, the RMB--dollar real exchange rate depreciated, despite China's rapid income growth relative to the US. We develop a macroeconomic-trade model of the very long-run equilibrium RMB-dollar real exchange rate. We show that this long-run depreciation of the RMB-dollar real...

In this paper, we focus on the movements of the yen on Japanese industries, and on the sectoral reallocation of Japanese employment. We show that the appreciation episodes of 1985 and 1995 have significantly hurt the ability of Japanese industries to compete with U.S. industries, by raising the...

In this paper, we estimate the impact of dynamic externalities, using direct measures of total factor productivity (TFP) growth at the regional level. We find that, at the one-digit level, significant dynamic externalities exist for the finance, services, and wholesale and retail trade...