Alex Sander Carmo , Mauricio Vaz Bittencourt (p), Stanley Thompson

We empirically investigate the effect of exchange volatility on the extensive margin of international trade. Our investigation uses a panel set of international trade from fifty-four countries over the period 1995-2009. Using these data we estimate a nonlinear gravity trade model to help identify the determinants of a country’s extensive trade margin, defined as the number of products exported. We hypothesize that the volatility of a country’s exchange rate is a key determinant of extensive trade margins. Our empirical results confirm that an increase in exchange rate volatility reduces extensive margins.

Anna Dzienis (p)

This paper provides data and facts-based analysis of the potential impacts of Brexit on Japan`s economy. The analysis is conducted against a background of general economic situation in Japan, in particular the ongoing Shinzo Abe`s economic policy – Abenomics. It aims at describing Brexit consequences in the area of Japanese foreign trade and foreign direct investments.

Japan is a significant trade partner for the European Union, who benefits from equal access to the member countries` markets. In particular, to that of the United Kingdom, where around 20% of Japan’s total exports to the EU are destined and where nearly 1,000 Japanese companies operate. In June 2016, however, in a national referendum, the UK has voted to leave the EU. Brexit has raised political and economic challenges, not only to the EU member states, but also to the Union’s partners. If the UK leaves the EU, Japan`s economy could suffer from, i.a., weaker exports to the EU, decline in FDI or exchange rate fluctuation, which could, in turn, undermine Abenomics. The government of Japan, in a document titled Japan`s Message to the United Kingdom and the European Union, has explicitly described its concerns regarding the UK`s exit process, among which uncertainty surrounding Brexit negotiations is considered to be a major matter.

Author provides an analysis of the internal and external situation of Japan. First, examines current economic policy in Japan and sheds light on Japan`s perception of the UK`s issue, then describes Japan`s foreign trade and reports on Japan`s outward FDI. Interestingly, in 2016 Japanese firms made record-high investments in the EU and in the UK. Finally, the problem of the EU-Japan Economic Partnership Agreement (EPA) is not left without discussion.