Abstract
We analyze the effects of gasoline prices and exchange rates on Japanese automobile imports to the United States between 1970 and 2004. We test the relationships before, during, and after the Voluntary Restraint Agreement placed on Japanese imports between 1981 and 1988. We also control for general demand for automobiles and domestically manufactured Japanese vehicles. As expected, we found that demand for Japanese imports is positively correlated with the price of gasoline. Before 1988 the demand for Japanese imports contributed to a strengthening of the yen. But after, a positive relationship between the yen-for-dollar exchange rate and imports has prevailed.
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