THE IMPACT OF JAPANESE AUTO VRAS ON THE UNITED-STATES AND JAPANESE ECONOMIES

The voluntary export restraint agreement (VRA) limiting Japanese exports of cars to the United States is evaluated. Extending a previous article dealing with Japanese transplant auto factories in the United States, the authors examine impacts of alternative responses to the VRA at the micro and macro level. The VRA will result in a modest improvement in the bilateral trade balance. It will provide a small macroeconomic stimulus to the US economy, but will affect output in Japan adversely.1