Ronald I. McKinnon, Kenichi Ohno. Dollar and Yen: Resolving Economic Conflict between the United States and Japan. Cambridge, Mass. and London: MIT Press, 1997. x + 266 pp. $39.50 (cloth), ISBN 978-0-262-13335-7.

Reviewed by Aaron Forsberg (Legal Science Institute, Meiji Gakuin University, Tokyo, Japan)
Published on H-US-Japan (September, 1999)

The Ever-Higher Yen Reconsidered

Readers will find Dollar and Yen a rich and timely addition to the literature on relations between the United States and Japan as well as that on exchange rate economics. Professors Ronald I. McKinnon and Kenichi Ohno (of Stanford and Tsukuba universities respectively) focus on the economic conflicts across the Pacific in recent decades, through the lens of the yen-dollar exchange rate and expectations about how it will move in the future (p. ix). For economists, the book is of interest because the authors make an impressive theoretical and empirical case against the prevailing view that the U.S.-Japanese trade imbalance should be corrected by dollar depreciation (or yen appreciation). The book is also notable because the authors have taken special care to present their analysis in a manner accessible to the wider audience interested in relations between Japan and the United States. Dollar and Yen thus represents a compelling analysis of U.S.-Japanese economic conflict and possible solutions that merit attention from academics, policymakers, and the attentive public in both countries.

Few works on exchange rates attract much attention beyond specialist circles, so list members may be inclined to pass on this title as well. That would be a mistake, however. Dollar and Yen addresses a subject much larger than exchange rate matters, and it offers a new and provocative explanation for the persistence of economic and political conflict between Japan and the United States since the 1960s. McKinnon and Ohno correctly emphasize the role of disputes over the U.S.-Japanese trade balance in the yen's dramatic appreciation since 1971. More controversially, the authors make a convincing case that the yen's upward movement has not only failed as a means of balancing U.S.-Japanese trade flows, but has also had the unfortunate consequence of imposing deflation on Japan. The result, they conclude, is a persistent "policy trap"(p. 156) in which the solution to the trade imbalance and bilateral economic friction actually compounds these problems in a long-running vicious circle.

Two aspects of the authors' analytical framework set it apart from conventional approaches. First, McKinnon and Ohno contend that in the case of the U.S.-Japanese macroeconomic relationship, it is impossible to separate fiscal and monetary policies for exchange rate determination on the one hand and trade matters on the other as is usually the case. Trade flows, commercial policy, and especially trade policy disputes have, in their view, been a vital force behind both the yen's rise up to April 1995 and its subsequent fall. Second, McKinnon and Ohno treat the course of the yen-dollar exchange rate "as a forcing variable for Japanese monetary policy, rather than assuming that monetary policy independently determines the exchange rate"(p. 2). These two important causal chains--from mercantile pressure to the yen-dollar exchange rate, and from this exchange rate to Japanese monetary policy--underpin the book's historical analysis and lead the authors to recommend establishing a fixed exchange rate along with a broader commercial compact for the future.

The historical account of greatest interest to non-specialists appears in the book's first five chapters (123 pages). This review shall focus accordingly on these chapters in the greatest depth. Chapter One introduces the authors' principal argument. Readers uninitiated in international economics should be forewarned that theoretical analysis represents an important element of the book, but the McKinnon and Ohno handle the exposition of technical material in support of their proofs in ways that allow the non-specialist reader to grasp their main arguments. They write in plain understandable language, and they present many of the more complicated economic models in appendixes. The numerous tables, charts, and graphs appropriately placed throughout the book present a wealth of compelling statistical evidence in support of the authors' analysis.

Chapter Two surveys the structural origins of U.S.-Japanese trade conflict. The authors describe how differential rates of industrial productivity from 1954 to 1990 and the low rate of savings in the United States underpin the substantial U.S.-Japanese trade deficit. The statistical evidence in support of the claim that Japan experienced a higher rate of productivity in all industries except for oil and gas during the period is impressive. The authors sidestep the issue of the extent to which this triumph flowed from Japan's so-called industrial policy, which they call "developmentalism" (Bkaihatsushugi).[1] Instead, they correctly emphasize how the catch-up model has become unsustainable. It has, for example, bequeathed an unstable dualistic economic structure consisting of the nation's highly competitive export-oriented manufacturing industries on the one hand and heavily protected domestic producers on the other.[2] McKinnon and Ohno develop in considerable theoretical and empirical detail their claim that the persistent bilateral trade imbalance results from an American saving shortage rather than exchange rate variables or mercantile problems. Students familiar with basic macroeconomic theory will recognize the basic equation. Although the American trade deficit is a multilateral problem, the deficit with Japan is especially pronounced because, to quote the authors, it reflects "the increasing American tendency to overspend and the contrasting Japanese proclivity to underspend their respective incomes" (p.37). McKinnon and Ohno are hardly the first to make this point, but it is not sufficiently appreciated in either popular discussion or official consideration of U.S.-Japanese trade matters. [3]

Chapter Three studies the consequences of this upward pressure on the yen, and introduces one of the authors' main criticisms of the floating exchange rate system in effect since 1971. The core of their theoretical argument is the claim--which the evidence presented appears to support--that "the exchange rate often acts as a forcing variable that pushes price levels in one direction or another" (p. 62). (The authors expand on this argument in greater detail specific to Japanese price levels in chapter nine.) The widely accepted argument for a flexible exchange rate holds that currency depreciation is an efficient means of coordinating the adjustment required to reallocate resources (here to accommodate differential rates of industrial productivity and the low U.S. savings rate) without causing undue microeconomic distortion or macroeconomic instability.[4] Because this line of reasoning has become the conventional wisdom in U.S. policymaking as well as academic circles, McKinnon and Ohno go to special lengths to identify its shortcomings, both on theoretical grounds and as a prescription for policy.

The point they emphasize is that the effects of exchange rate changes on prices are hardly uniform, because they affect non-tradables such as most services, tradables competitive with foreign goods, and primary commodities quite differently. The effect of this exchange-rate movement on domestic prices (price pressure) and the scrambling of the domestic price structure that results (price diffusion) confers advantages to some industries and disadvantages to others. Electrical power companies importing petroleum, for example, enjoy sudden benefits from a rising currency. Manufacturers producing for export markets, by contrast, experience an erosion of competitiveness as the currency rises. Additionally, the degree to which the movement of the exchange rate affects domestic prices (pass-through) is significantly different for Japan than it is for the United States. Whereas the U.S. economy is relatively insulated from exchange-rate shocks, at least in the short term, Japanese prices are highly sensitive to exchange rate fluctuations. This asymmetry stems in large part from Japan's status as a resource-poor importer of a large number of primary products, and the often forgotten fact that a high percentage of Japan's foreign trade is invoiced in foreign currencies. McKinnon and Ohno note, for example, how only forty percent of Japan's exports and twenty percent of the nation's imports are invoiced in yen (p.64).

The authors inquire inconclusively into whether the slowdown of the major industrial economies since the early 1970s has been a consequence of introducing floating exchange rates and the wild exchange fluctuations that have resulted. What they do document, with reference to business indicators such as industrial production, is the two recent Japanese recessions induced by the high yen (known as "Bendaka fukyo" in 1986-87, and 1993-95.

Returning to the authors' historical account, a basic task of any international monetary system is to provide a mechanism for facilitating necessary adjustments in wages and prices between nations in a changing world over time. Chapters Four and Five inquire into the comparative record of the two very different adjustment mechanisms in place since the postwar Occupation: the fixed exchange rate regime in effect from about 1951 to 1971, and the floating exchange rate regime in effect since then. Unsurprisingly, the authors regard the period from 1951 to 1971 as the most harmonious in the U.S.-Japanese economic relationship. Under the fixed-rate international dollar standard, "the Bank of Japan geared its monetary policy to keeping the exchange rate at 360 yen per dollar," they note, "while the U.S. Federal Reserve anchored the common price level for tradable goods."(p. 75). Global inflation was contained, protectionist barriers came down, and trade between the two countries grew rapidly. Since 1971, by contrast, an ever-higher yen has disrupted the Japanese wage-adjustment mechanism (particularly monetary policy), generated instability in the mechanism for transferring capital across national borders, and, since 1985, aggravated the business cycles in both Japan and the United States.

In departing from the conventional wisdom that a floating exchange rate regime is better able to deal with shocks to the system, McKinnon and Ohno make clear that their horizon is considerably longer than that of the usual textbook justifications. Rather than focus on sudden or asymmetrical disturbances in supply or demand, the authors' main concern is the challenge posed by longer-term trends such as the differential rates of American and Japanese productivity during the period from 1951 to 1990. (This is not to suggest that the authors concede the point with regard to the utility of floating rates in dealing with textbook shocks; the appendix to chapter 4 argues that a regime in which the nominal value of the yen is tethered to the dollar would allow sufficient flexibility to deal with the most likely crises. Similarly, in chapter 8 they again take a comparative approach and argue that long-term interest rates are much more volatile under a floating rate regime, to the detriment of economic efficiency and security of investment.) This willingness to reconsider the basic theoretical underpinnings of the current exchange rate regime rather than focus solely on the peculiarities of the Japanese economy or the U.S.-Japanese relationship defines the authors' analysis apart and is the reason why it is important.

The authors' appreciation of the interaction between external and internal economic forces stands out clearly in their treatment of Japanese monetary policy. In evaluating the operation of the fixed-exchange rate system during the 1950s and 1960s, for example, they show how it consisted of both the fixed nominal exchange rate and monetary expansion so as to offset the nation's higher productivity (that is, to support the high growth in money wages and consumer prices of the period). In the context of Japan's export-oriented economy and the nation's obligation to fix the yen within a narrow two percent band against the dollar, the Bank of Japan was essentially forced to expand the money supply so as to maintain import demand and avoid exchange rate appreciation.

American pressure on Japan to appreciate the yen undermined this wage adjustment mechanism. In conjunction with the "inflationary explosion" of the early 1970s, the flight from dollars into yen (marks and other currencies) set off a similar "inflationary explosion" within Japan, reflected in massive wage settlements that had little connection with actual productivity increases (p.84). Following the run on the dollar in 1977-78, expectations of an ever-higher yen became permanent (the thinking in Japan being that the yen would increase by three to four percentage points per year over the long-term). Inflationary expectations in the Japanese labor market shifted downward, and long-term nominal interest rates in Japan fell below their American counterparts for the first time and have remained low ever since. (Since inflation was low, however, real rates remained relatively high.) In short, yen appreciation forced what the authors call "relative deflation" on Japan (p. 83).

For the period since 1980, McKinnon and Ohno aim at larger targets, raising immensely the political stakes of what is on first glance a highly academic economic argument. Echoing many other voices, they note how steep appreciation of the yen beginning in 1985 (following the Plaza Agreement) induced a recession in Japan "Bendaka fukyo". This result should not be surprising. At the beginning of 1985 the yen stood at 260 to the dollar; two years later it was holding at around 150 to the dollar (p. 108). More provocative is their argument that this appreciation set the stage for the bubble economy of the late 1980s. At mid-decade the Japanese confronted a liquidity trap in which nominal interest rates were low while real interest rates remained high and investment was depressed. In response, Japanese authorities relied upon monetary rather than fiscal stimulus to revive the economy.[5] They cut the official discount rate (down to 2.5 percent in February 1987, a record low at the time) and set out to perpetuate an ongoing rise in asset values, particularly in real estate. The initial result of these policies, we now know, was a turbo-charged recovery that escalated quickly into a speculative bubble.

The most engaging aspect of Dollar and Yen is how McKinnon and Ohno trace the stories of exchange rate fluctuations and currency movements through to the problems of the 1990s. The asset bubble may have facilitated recovery, but it also set the stage for an unusually hard landing that shook Japan's financial system to its foundations in the early 1990s (and from which the nation has not yet fully recovered). The damage caused by the bubble's burst was not limited to Japan, however. McKinnon and Ohno draw particular attention to its connection with the U.S. credit crunch of 1990-92, which they argue was caused by a slowdown in net capital imports into the United States. Rather than blame "overzealous regulators,"(p. 119) as the familiar interpretations do, they plausibly identify the enormous cost of German reunification and the Japanese financial crash as the forces that suddenly and severely reduced capital inflows into the United States. Japan actually repatriated long-term capital in 1991, shifting to short-term investment (p. 120). The recovery in Japanese long-term lending from 1993 forward contributed in part to the American economic revival of the period since then.

American mercantile pressure on Japan from 1993 to 1995, however, prompted a second high-yen induced recession (Bendaka fukyo). The bubble option was not really available as an escape hatch the second time around, but in the authors' view Japanese monetary policy during the first half of the decade was at times tighter than it should have been. The only escape hatch available was yen depreciation, which became possible with the easing of American mercantile policy toward Japan in April 1995.

Although the theoretical analysis in chapters six through nine make them seem the most daunting of the book, they basically reinforce the main themes of the authors' indictment of present policy and their case for fixing the nominal value of the yen. Chapter Six explores in detail how enduring changes in a country's current account flow from changes in the savings-investment balance. That is, currency devaluation is unlikely to be an effective means of reducing the deficit in the current account. Chapter Seven presents a cogent critique of the theoretical literature--particularly that based on the modern elasticities approach to the trade balance--associated with the conventional wisdom that yen appreciation represents one (or at least a partial) solution to the bilateral trade imbalance.[6]. Emphasizing the long-term rather than the medium term (of, say, two years), McKinnon and Ohno present a convincing argument in support of the claim that "the impact of nominal yen appreciation simply washes out because of the fall in the Japanese price level relative to the American" (p. 150).

The authors single out the proponents of the modern elasticities approach for special criticism because of the role economists have played in creating the current "policy trap." Unlike meteorological theories, economic theories contribute directly to policymaking as well as the formation of expectations. McKinnon and Ohno do not pull any punches in their description of the vicious circle in which "wrong theory," "wrong policy," and policy failure perversely reinforce each other. Advice to depreciate the dollar, for example, has led to pressure on the yen, with the result of compounding the problems of Japanese deflation, the U.S. current account deficit, and economic friction. This is not to suggest that McKinnon and Ohno place all of the blame on the Americans. The Japanese too consider yen appreciation as one means of easing trade friction. As the saying goes, it takes two to tango.

In chapter Ten-- the authors propose a commercial compact and a monetary accord as their solution for springing the current policy trap and preventing a "relapse" of the syndrome of the ever-higher yen. On the American side, the commercial compact calls for "Brelaxing tensions on a permanent basis" (p. 206). First and foremost the United States must "unequivocally abandon any commercial use of exchange rate policy" (p. 207). This includes commercial disputes as well as broader initiatives to correct the current account deficit. Although they allow for trade negotiations, McKinnon and Ohno suggest specifically that the president should forswear the use of the Super 301 clause of the amended trade act, leaving settlement of trade disputes to institutions such as the World Trade Organization. They are less specific with regard to private protectionism in the form of private petitions under U.S. antidumping laws, for example. McKinnon and Ohno call for Japan to "commit itself to a concrete timetable for deregulating its hitherto protected sectors, including construction, transportation, telecommunications, finance, distribution, health care (pharmaceuticals), and agriculture" (p. 208). To ensure that the plan be carried out within five years, they further suggest that a task force directly under the prime minister be responsible for monitoring the program. The authors do, however, make some allowance for protection of Japanese agriculture, owing to its particular vulnerability to exchange risk.

In short, the authors advocate commitment to American restraint and acceleration of Japanese deregulation. Political will is an obvious requirement on both sides, but neither policy calls for swimming against the tide of history, so to speak. Rather, the authors understand how both countries stand at a crossroads. Their commercial compact calls for reinforcing trends in evidence on both sides of the Pacific.

The basic idea of the monetary accord is easily summarized: agreement on a target zone for the yen-dollar exchange rate (plus or minus five percent to be narrowed over time), basing the central rate on the initial purchasing power parity that aligns wholesale (not consumer) price levels. Dollar and Yen mentions other relevant provisions, such as free currency convertibility and public action in concert by both governments to maintain current values, but the details are left to the book's companion volume.[7]

The analysis in Dollar and Yen has lost none of its force in the two years since it was published. Although the yen's actual value has remained far below the fantastic heights of eighty yen to the dollar, the argument McKinnon and Ohno present hinges on expectations. And the suspicion lingers that stability in the yen-dollar exchange rate (to the extent that it exists at all) is ad hoc and highly vulnerable to shock. After the yen's precipitous fall in mid-1998 (to over 145 yen to the dollar), there seems to be a coordinated effort on the part of both nations this year to stabilize the exchange rate near 120 yen to the dollar, a figure which is considered to reflect current purchasing power parity with the United States and other East Asian countries. Renewed pressure on the yen in June 1999, for example, prompted intervention in currency markets by the Bank of Japan.[8] As of this writing, however, the yen is hovering around 110 yen to the dollar, following news of a record U.S. trade deficit and talk of economic recovery in Japan.[9]

When evaluating the impact of expectations on markets and policy today, however, movements in the spot value of the yen are not necessarily the most relevant signal. In a recent essay written for the Economist, McKinnon argues that expectations of a higher yen are too deeply embedded to be quashed by recent spot intervention.[10] He also expands the argument in Dollar and Yen to account for the persistent failure of economic stimulus policies in Japan this decade. Nominal interest rates are near zero, but real interest rates remain high, owing to the high forward (as opposed to the spot) value of the yen. This sort of liquidity trap cannot be sprung either by reducing current nominal interest rates (zero is a concrete floor) or by depreciation of the spot value of the yen (which would risk aggravating the trade imbalance). Rather, McKinnon argues, what is necessary is to stabilize the dollar-yen exchange rate over the long term, and he again proposes an international pact as the best means toward this end.

Neither McKinnon nor Ohno doubts the considerable political difficulty of realizing the policies they have recommended. But in this context political difficulty is not a particularly compelling objection, particularly if the authors are correct. Indeed, when longstanding approaches have exhausted themselves and policy debates run in familiar but unproductive circles, the initiative rests with the brave. For this reason, Dollar and Yen represents a significant contribution to current discussion of public policy as well as the scholarly literature. The book's case is well argued, well-supported empirically and theoretically, and advances a clear policy agenda at a time of drift. It challenges the basic assumptions and conclusions of prevailing scholarly opinion and the conventional wisdom in policymaking circles. As such, Dollar and Yen demands an answer from both the research and policy communities.

In fact, the book's argument about the high yen's consequences in the recent past is already in play in Japan as the national debate about how to restore the nation to economic health continues. The notion that the high yen of 1993 to 1995 resulted from mercantile friction and induced a recession in Japan is not a new one. But it has recently received publicity in a series of articles appearing in the Yomiuri newspapers written by Eisuke "Mr. Yen" Sakakibara, formerly Ministry of Finance Vice-Minister for International Affairs.[11]

That Mr. Sakakibara is championing the argument, however, suggests the subtle challenges involved in arriving at any American-Japanese consensus on the recommendations that McKinnon and Ohno have presented, combining deregulation on the one hand with management of the currency exchange rate on the other. Although he understands that Japan must change in order to revive, Mr. Sakakibara is hardly among the most enthusiastic advocates of either deregulation or curtailing the power of Japan'bureaucracy. He is in fact highly critical of the Anglo-American preference for relying on market forces in general, and American policy in particular. Having long defended the policies of the Ministry of Finance as one of the institution's most visible public figures, Mr. Sakakibara emphasizes that Japan must retain the distinctive features of its system as the nation recasts its political and economic order in the face of challenge.[12] In practical terms, this stance does not ally him with the most insistent Japanese voices for deregulation.

Similarly, American advocates of deregulation tend to favor market solutions in principle and are thus not natural supporters of a proposal for formal government management of exchange rates. Advocates of managed trade (where governments rather than markets attempt to determine outcomes), by contrast, may come more easily to accept governmental intervention tethering the yen to the dollar in principle, but in practice many have been among the most insistent of America's trade warriors talking up the yen.

Looking further into the future and leaving political considerations aside, one must also question whether changes in the yen's value will continue to have the same sorts of effects on Japan's economy as in recent years. It has been almost a decade since the collapse of the bubble, yet Japan's economy still lags. Will the differential rates of productivity in evidence up to 1990 apply to the growth industries of the future such as those in telecommunications (or for that matter, will productivity in services even be measurable)? One must also ask whether Japan might not be better served by a higher yen in the future. Certainly, if more of Japan's trade were invoiced in yen, upward pressure on the currency would pose less of a shock to the system. Many forces, not least of them bureaucratic preference, have encouraged Japan to invoice its trade in foreign currencies. Such preferences may change. Similarly, if Japanese manufacturing companies were to continue to invest heavily in East Asia in order to take advantage of the youthful labor force there (Japan's labor force will actually shrink in the future), within a decade or two the contours of the nation's international trade promise to be very different than they are today. As Milton Ezrati suggests in his recent book, Kawari, the same demographic pressures are likely to create a demand for a higher yen as Japan's aging population must rely upon earnings >from investments rather than exports in order to maintain a high standard of living.[13]

That Dollar and Yen raises such fundamental questions is testimony to its importance. It deserves careful consideration. The provocative interpretation of the recent past that McKinnon and Ohno offer and the policy prescriptions that flow from it promise to enliven debate among academics as well as among those in the policy arena. U.S.-Japanese relations, one hopes, will be the better for it.

Notes

[1]. The "Bkaihatsu (developmentalism) is drawn from Yasusuke Murakami, Anti-Classical Political Economy (Tokyo: Chuo Koron-sha, 1992). In Japanese

[2]. To illustrate the practical impact of Japan's economic dualism, McKinnon and Ohno focus on the divergence between the movements of the consumer price index (CPI) relative to the wholesale price index (WPI). Continued innovation has enabled Japan's competitive firms in the manufacturing sector to lower their prices while maintaining adequate profit margins; protected and uncompetitive producers, by contrast, have had to raise their prices relative to those of manufactured goods in order to survive (pp. 31-35). Since the CPI includes food, housing, utilities (among other non-traded or protected industries) and the WPI includes a broad basket of exportable industrial products, the divergence between the CPI and the WPI in Japan reflects both the widening productivity gap between the two sectors and the price the Japanese consumer pays for protection (in comparison with consumers in other advanced industrial nations). Anyone who has lived in Japan will certainly recognize the practical effect of the forces that the authors describe, namely higher prices.

[3]. An exception is the perceptive account of Michael Armacost, formerly ambassador to Japan (1989-1993): Friends or Rivals?: The Insider's Account of U.S.-Japan Relations (New York: Columbia University Press, 1995). Armacost's book integrates an appreciation of macroeconomic forces with concrete discussion of familiar problems such as Japanese market barriers. On trade issues during his tenure in office, see especially pp. 32-74.

[4]. Milton Friedman has explained the utility of adjusting the exchange rate by comparing it to "daylight saving time." In the same way that it is easier to set the clock an hour earlier than to have each individual separately change his or her daily routine, it is far simpler "to allow one price to change, namely, the price of foreign exchange, than to rely upon changes in the multitude of prices that together constitute the internal price structure" (quoted on p. 57).

[5]. For a critical account of the Ministry of Finance and the bubble economy, see Peter Hartcher, The Ministry: How Japan's Most Powerful Institution Endangers World Markets (Boston: Harvard Business School Press, 1998), esp. pp. 60-95.

[6]. McKinnon and Ohno are responding primarily to recent work in the field, such as that of William R. Cline, Stephen S. Golub, Paul R. Krugman, and Guy Meredith. See Cline, "Japan's Current Account Surplus" (Washington, DC: Institute for International Economics, July 1993); Golub, "The United States-Japan Current Account Imbalance: A Review," International Monetary Fund Paper on Policy Analysis and Assessment, PPAA/94/8 (Washington, DC: IMF, March 1994); Krugman, Has the Adjustment Process Worked? Policy Analyses in International Economics, no 34 (Washington DC: Institute for International Economics, 1991); and Meredith, "Revisiting Japan: External Adjustment Since 1985," IMF Working Paper WP/93/52 (Washington, DC: IMF, June 1993).

[7]. McKinnon, The Rules of the Game: International Money and Exchange Rates (Cambridge, Mass: MIT Press).

[8]. Yomiuri Shimbun, 21 July 1999. The Bank of Japan, for example, asked the Federal Reserve Bank to intervene in the market, buying dollars and selling yen, in order to bring down the value of then yen. The yen was then valued at about eleven yen to the dollar.

[9]. Exchange rates for the week of 30 August to 3 September 1999 are published in major newspapers such as the Nihon Keizai Shimbun.

[10]. McKinnon, "Wading in the yen trap," Economist, July 24, 1999, pp. 79-82.

[11]. Eisuke Sakakibara, "Early economic recovery stifled by U.S. policies," Daily Yomiuri, 22 August 1999; and Sakakibara, "Japan-U.S. trade talks prompted dollar's plunge," Daily Yomiuri, 3 September 1999.

[12]. See, for example, Sakakibara, Shijogenrishugi no Shuen: Kokusai Kinyu no Jugonen [The Crisis of Free-Market Principles: Fifteen Years of International Finance] (Tokyo: PHP, 1999). The book is a personal account of present-day international finance that draws upon the author's keen awareness of history and his own career in government. The translation of the book's title is my own. It is unofficial and suggestive rather than literal.

[13]. Milton Ezrati, Kawari: How Japan's Economic and Cultural Transformation Will Alter the Balance of Power Among Nations (Reading, Mass.: Perseus Books, 1999), 87-114.

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Citation: Aaron Forsberg. Review of McKinnon, Ronald I.; Ohno, Kenichi, Dollar and Yen: Resolving Economic Conflict between the United States and Japan. H-US-Japan, H-Net Reviews. September, 1999.
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