U.S. Trade Balance, Protectionism, and Japanese Equity Prices: International Influence of National Macroeconomic News

  • Raj Aggarwal
  • David C. Schirm


This paper provides new evidence of the international influence of national macroeconomic news. It is documented that announcements of U.S. trade balances significantly influence equity prices for a number of Japanese industry groups especially in the second half of the 1980s. Larger than expected U.S. trade deficits and, perhaps, the associated higher probabilities of protectionist activities in the U.S., are associated with lower stock prices for Japanese firms in export oriented industries. The opposite effects are observed for Japanese firms in domestic industries with higher U.S. trade deficits indicating their possibly higher relative international competitiveness. These findings of a differential industry influence of U.S. trade balance announcements on Japanese stock prices have important implications for portfolio diversification, international asset pricing, trade negotiations, and other policies for international economic coordination.


Exchange Rate Central Bank Asset Price Stock Prex Trade Balance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  • Raj Aggarwal
    • 1
  • David C. Schirm
    • 1
  1. 1.John Carroll UniversityClevelandUSA

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