1. A Japanese puzzle.
- Subjects
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CAPITAL movements , *BALANCE of payments , *FOREIGN exchange , *INTERNATIONAL finance , *RESERVES (Accounting) ,ECONOMIC conditions in Japan - Abstract
This article focuses on the mystery behind the capital flow in Japan. A current-account surplus need not go hand in hand with an outflow of both long- and short-term capital. Japan in the late 1980s and 1990s offers evidence. Despite its current-account surplus, Japan was borrowing short-term money from abroad in order to invest far larger sums in overseas assets. Then, after 1990, this peculiar relationship went into reverse. Despite a growing current-account surplus, long-term capital flowed into Japan, implying a correspondingly huge outflow of short-term capital.
- Published
- 1993