Proceedings of the 2nd International Academic Conference on Blockchain, Information Technology and Smart Finance (ICBIS 2023)

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The Influence of Real Exchange Rate Changes of Yen on FDI Absorption in Japan

Authors
Jiatong Ju1, Ziyu Zhou2, Haiyang Liu3, Wenwen Yin3, Yiyi Fu4, Xiaofan Li5, *
1School of Computer Science and Engineering, Wuhan Institute of Technology, Wuhan, Hubei, China
2School of Economics, Yunnan University, Kunming, Yunnan, China
3School of Mathematics and Physics, Wuhan Institute of Technology, Wuhan, Hubei, China
4The College of Foreign Languages and Cultures, Sichuan University, Chengdu, Sichuan, China
5School of Law and Business, Wuhan Institute of Technology, Wuhan, Hubei, China
*Corresponding author. Email: lixiaofa100@wit.edu.cn
Corresponding Author
Xiaofan Li
Available Online 10 August 2023.
DOI
10.2991/978-94-6463-198-2_56How to use a DOI?
Keywords
Cointegration test; Granger causality tests; Exchange rate; International Finance
Abstract

This paper empirically investigates the relationship between the real exchange rate of the JPY and FDI absorption in Japan from 1995 to 2020 using cointegration tests and Granger causality tests. On the one hand, when the exchange rate changes, there is a time lag in the investment decision of enterprises, on the other hand, foreign direct investment in enterprises in capital-importing countries often needs to be based on the expectation of future exchange rates. Therefore, this paper models the real effective exchange rate index of the yen with the different lag periods as well as the amount of direct foreign investment absorbed in Japan respectively. It is shown that at 95% significance level, the regression equation coefficients with a lag of 4,5,6 years between the two sides were statistically significant. There is neither a long-term stable cointegration relationship nor Granger causality relationship between the real effective exchange rate of the Japanese yen, or the fluctuation of the Japanese yen exchange rate complemented in the following studies, and the absorption of foreign direct investment in Japan. The results indicate that exchange rate behavior has no significant effect on attracting foreign investment in Japan’s foreign exchange market. On this basis, the corresponding policy suggestions are put forward to maintain the stability of foreign exchange and capital markets.

Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2nd International Academic Conference on Blockchain, Information Technology and Smart Finance (ICBIS 2023)
Series
Atlantis Highlights in Computer Sciences
Publication Date
10 August 2023
ISBN
10.2991/978-94-6463-198-2_56
ISSN
2589-4900
DOI
10.2991/978-94-6463-198-2_56How to use a DOI?
Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Jiatong Ju
AU  - Ziyu Zhou
AU  - Haiyang Liu
AU  - Wenwen Yin
AU  - Yiyi Fu
AU  - Xiaofan Li
PY  - 2023
DA  - 2023/08/10
TI  - The Influence of Real Exchange Rate Changes of Yen on FDI Absorption in Japan
BT  - Proceedings of the 2nd International Academic Conference on Blockchain, Information Technology and Smart Finance (ICBIS 2023)
PB  - Atlantis Press
SP  - 540
EP  - 547
SN  - 2589-4900
UR  - https://doi.org/10.2991/978-94-6463-198-2_56
DO  - 10.2991/978-94-6463-198-2_56
ID  - Ju2023
ER  -