Willem Thorbecke is a Senior Fellow at Japan's Research Institute of Economy, Trade, and Industry (RIETI). Prior to this he was a Senior Research Fellow at the Asian Development Bank Institute and an Associate Professor at George Mason University. His research focuses on global value chains, exchange rates, and Asian development.
Recent publications include “Why Japan Lost Its Comparative Advantage in Producing Electronic Parts and Components,” Journal of the Japanese and International Economies, 54, 2019, Article 101050 and “Oil Prices and the U.S. Economy: Evidence from the Stock Market,” Journal of Macroeconomics, 61, 2019, Article 103137.
As the 2020 FFJ/Banque de France Fellow he will investigate how exchange rates affect profit margins and export volumes for Japanese and European firms. A weaker currency could raise profit margins if firms keep their foreign currency export prices constant. It could raise export volumes if firms lower foreign currency export prices. The research methodology to investigate these effects entails estimating exchange rate pass-through equations, export equations, and exchange rate exposure equations. These equations can be estimated at the firm, industry, and country levels.
The differences and similarities between the impact of exchange rates on Japanese firms and European firms will then be investigated. For instance, do the intricate supply chains in Asia cause exchange rates to influence exports differently in Japan than in Europe. How has offshoring and outsourcing in Japan and Europe affected how exchange rates influence firms? Do exchange rates affect firms in Japan and Germany, countries that exports sophisticated capital and consumer goods, differently from firms in Southern European countries that export less sophisticated products such as clothes, shoes, and food? The study will then conclude by drawing lessons for policymakers from the findings.