Why are Japanese Industries Immune to Devaluation of the Dollar?

Abstract In spite of the continual fall of the dollar against the yen, the Japanese trade surplus against the US still remains strong. One of the reasons for this high trade surplus is that the devaluation of the dollar benefits the Japanese industries which use US products as their inputs and helps them improve their competitive edge in the world market. This paper introduces the multicountry industrial linkage model to assess the industrial effects of devaluation of the dollar against the yen.