2021 Fiscal Year Research-status Report
Impacts of tariffs of the US against China on the machinery exports of China and Japan to the US
| Project/Area Number |
20K01642
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| Research Institution | Waseda University |
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Principal Investigator |
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| Project Period (FY) |
2020-04-01 – 2023-03-31
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| Keywords | impact of tariff / system GMM / structural break / misalignments |
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| Outline of Annual Research Achievements |
I have regressed Japanese machinery exports to the US on export prices (lags 1 and 2), exchange rates of local currencies against the US dollar and oil prices. The local currencies include Japanese yen, Chinese renminbi, euro, Korean won, Mexican peso. The regression was implemented by the difference GMM. Specifically the xtabond2 codes of STATA was used to estimated the coefficient values of the explanatory variables.
The Arellano-Bond AR(2) statistic was insignificant, while the Hansen's J test statistic was significant, implying the model is well specified. However, the model still suffers structural changes between the pre and the post-global crisis period. It is quite clear that, for example, the impacts of the Japanese exchange rates on the Japanese exports were reduced after the global financial crisis. The structural break found in this preliminary estimations suggests that we must be careful when we extend the model for further studies. Accordingly, my current work focuses on deciding the periods covered by this project.
I have done a similar estimation with Chinese and Korean machinery exports to the US and confirmed the AR(2) and J test statistics confirmed that the export models are well specified just like the Japanese model. In the meantime, the problems with structural breaks and inconsistent estimates of exchange rates were also found.
Considering the structural breaks and the exchange rate misalignments, the periods covered in the project and explanatory variables included will be finally determined. Then, tariffs will be added to the model.
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| Current Status of Research Progress |
Current Status of Research Progress
3: Progress in research has been slightly delayed.
Reason
I planned to consult with exporting companies in Japan, Korea and China to solicit their opinions about the preliminary results of my research to check whether the research is in the right direction. However, due to turbulence caused by the Covid 19, I could not have chances to talk with them. Besides, I could not present my finding in international conferences by the same reason and it was not easy to employ a research assistant. However, since the covid-19 situation is getting better and we are accustomed to this new environment, I am now able to solicit the comments and opinions, thus the research will soon progress as planned.
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| Strategy for Future Research Activity |
I recently succeed to employ an RA who will arrange the whole data set including the tariff data. As soon as the tariff data are correctly added to the data set. The final versions of the estimation model will be tested.
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| Causes of Carryover |
Due to the Covid 19 situation, I could not do research trips and seminar presentations. It is mainly why some budgets are left.
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