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How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry

Japan has experienced several appreciation episodes. These appreciations may squeeze profit margins and lower export volumes. This paper investigates whether firms can weather appreciation periods by producing differentiated rather than commoditized products. To do this it investigates different sec...

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Detalles Bibliográficos
Autor principal: Thorbecke, Willem
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Elsevier B.V. 2020
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7462893/
https://www.ncbi.nlm.nih.gov/pubmed/32905046
http://dx.doi.org/10.1016/j.japwor.2020.101035
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author Thorbecke, Willem
author_facet Thorbecke, Willem
author_sort Thorbecke, Willem
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description Japan has experienced several appreciation episodes. These appreciations may squeeze profit margins and lower export volumes. This paper investigates whether firms can weather appreciation periods by producing differentiated rather than commoditized products. To do this it investigates different sectors within the Japanese transportation equipment industry. Results from estimating pricing-to-market (PTM) coefficients indicate that firms producing differentiated products can pass-through more of exchange rate appreciations into higher foreign currency prices and thus better preserve their profit margins. Results from estimating trade elasticities are consistent with the PTM results and indicate that the automobile industry has exported much less than predicted after the yen depreciated in 2012. Finally, estimates of the stock market exposure across sectors indicates that the profitability of firms producing differentiated products is less exposed to appreciations. Producing differentiated, knowledge-intensive goods can thus help firms to survive endaka periods.
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spelling pubmed-74628932020-09-02 How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry Thorbecke, Willem Japan World Econ Article Japan has experienced several appreciation episodes. These appreciations may squeeze profit margins and lower export volumes. This paper investigates whether firms can weather appreciation periods by producing differentiated rather than commoditized products. To do this it investigates different sectors within the Japanese transportation equipment industry. Results from estimating pricing-to-market (PTM) coefficients indicate that firms producing differentiated products can pass-through more of exchange rate appreciations into higher foreign currency prices and thus better preserve their profit margins. Results from estimating trade elasticities are consistent with the PTM results and indicate that the automobile industry has exported much less than predicted after the yen depreciated in 2012. Finally, estimates of the stock market exposure across sectors indicates that the profitability of firms producing differentiated products is less exposed to appreciations. Producing differentiated, knowledge-intensive goods can thus help firms to survive endaka periods. Elsevier B.V. 2020-12 2020-09-02 /pmc/articles/PMC7462893/ /pubmed/32905046 http://dx.doi.org/10.1016/j.japwor.2020.101035 Text en © 2020 Elsevier B.V. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active.
spellingShingle Article
Thorbecke, Willem
How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title_full How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title_fullStr How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title_full_unstemmed How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title_short How Japanese firms can weather endaka periods: Evidence from the transportation equipment industry
title_sort how japanese firms can weather endaka periods: evidence from the transportation equipment industry
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7462893/
https://www.ncbi.nlm.nih.gov/pubmed/32905046
http://dx.doi.org/10.1016/j.japwor.2020.101035
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