ABSTRACT
This Chapter presents a historical review of empirical studies on the Japanese-US. Voluntary Export Restraint (VER) and discusses the merits and limitations of the methodologies which have been used to study the VER's efficacy. In keeping with the present analysis, only those studies which evaluate the VER's effects on the profitability of firms in the domestic automobile market are reviewed. The studies reviewed can be placed in one of two methodological categories:base-year simulation method(BYSM) and ex post forecast method(EPFM). BYSM is a comparative statics exercise in which the base year solutions to a system of equations is compared to other particular solutions of the same system which are generated under alternative economic scenarios. EPFM utilizes identified relationships between endogenous variables and predetermined explanatory variables to forecast values of the former under alternative market conditions. As a technique, EPFM improves on BYSM by allowing changes in exogenous market conditions to be reflected in forecasted values.
