The impact of the appreciation of East Asian currencies on global imbalance

Recently, the global current account imbalance has received considerable attention in the international financial market. In this paper, we focus on the relationship between US and East Asia from the perspective of the trade balance and examine whether the appreciation of East Asian currencies against the dollar would affect the respective outputs of East Asia and the US or be effective in reducing the global imbalance. There are few empirical studies directly focused on the trade and output between the US and East Asia. Our empirical results suggest that currency appreciation is expansionary for East Asian economies and will increase the East Asian output, which will contribute to the reduction in US trade deficits.