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Japan’s Foreign Assets and Liabilities: Implications for the External Accounts
Author:
Mariana Colacellinull

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Deepali Gautamnull

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Cyril Rebillardnull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 026
Language:
English
Publication Date:
05 Feb 2021
DOI:
https://doi.org/10.5089/9781513568270.001
ISBN:
9781513568270
ISSN:
1018-5941
Pages:
40
Keywords:
NFA; Japan; Current Account; Income Account; Income Balance; Exchange Rate Elasticity; WP; income credit; balance response; debit channel; property income
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The composition of Japan’s current account balance has changed over time, with an increasing income balance primarily reflecting a growing net foreign asset position and higher corporate saving. A comparison of Japan’s income balance with peer countries highlights: (i) relatively high yields on FDI assets, and (ii) very low FDI liabilities in Japan. Panel estimation is used to derive separate exchange rate elasticities for income credit and debit, with novel accounting that disentangles the mechanical from the economic response to exchange rate fluctuations. Despite the changing composition of Japan’s current account balance, its response to exchange rate movements still operates mostly through the traditional trade channel, with a small but reinforcing contribution from the income balance.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2021: Issue 026