Assessing China's exchange rate regime:
This paper examines two related issues: (a) the implicit methodology used by the U.S. Treasury in determining whether China and America's other trading partners manipulate their exchange rates, and (b) the nature of the Chinese exchange rate regime since July 2005. On the first issue, we invest...
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| Main Authors: | , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Series: | Working paper series / National Bureau of Economic Research
13100 |
| Online Access: | Volltext |
| Summary: | This paper examines two related issues: (a) the implicit methodology used by the U.S. Treasury in determining whether China and America's other trading partners manipulate their exchange rates, and (b) the nature of the Chinese exchange rate regime since July 2005. On the first issue, we investigate the roles of economic variables consistent with the IMF definition of manipulation - the partners' overall current account/GDP, its reserve changes, and the real overvaluation of its currency - but also some variables suggestive of American domestic political considerations -- the bilateral trade balance, US unemployment, and an election year dummy. The econometric results suggest that the Treasury verdicts are driven heavily by the US bilateral deficit, though other variables also turn out to be quite important. On the issue of China's de facto exchange rate regime, we apply the technique introduced by Frankel and Wei (1994) to estimate implicit basket weights, adding several refinements. Within 2005, the de facto regime remained a peg to the dollar. However, there was a modest but steady increase in flexibility subsequently. We test whether US pressure has promoted RMB flexibility. We also test whether the recent appreciation against the dollar is due to a trend appreciation against the reference basket or a declining weight on the dollar in the reference basket, and suggest that they have different policy implications. |
| Item Description: | Literaturverz. S. 34 - 37 |
| Physical Description: | 79 S. graph. Darst. 22 cm |
Staff View
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| 520 | 8 | |a This paper examines two related issues: (a) the implicit methodology used by the U.S. Treasury in determining whether China and America's other trading partners manipulate their exchange rates, and (b) the nature of the Chinese exchange rate regime since July 2005. On the first issue, we investigate the roles of economic variables consistent with the IMF definition of manipulation - the partners' overall current account/GDP, its reserve changes, and the real overvaluation of its currency - but also some variables suggestive of American domestic political considerations -- the bilateral trade balance, US unemployment, and an election year dummy. The econometric results suggest that the Treasury verdicts are driven heavily by the US bilateral deficit, though other variables also turn out to be quite important. On the issue of China's de facto exchange rate regime, we apply the technique introduced by Frankel and Wei (1994) to estimate implicit basket weights, adding several refinements. Within 2005, the de facto regime remained a peg to the dollar. However, there was a modest but steady increase in flexibility subsequently. We test whether US pressure has promoted RMB flexibility. We also test whether the recent appreciation against the dollar is due to a trend appreciation against the reference basket or a declining weight on the dollar in the reference basket, and suggest that they have different policy implications. | |
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| id | DE-604.BV023593011 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-016908341 |
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| physical | 79 S. graph. Darst. 22 cm |
| publishDate | 2007 |
| publishDateSearch | 2007 |
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| publisher | National Bureau of Economic Research |
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| spelling | Frankel, Jeffrey A. 1952- Verfasser (DE-588)124551858 aut Assessing China's exchange rate regime Jeffrey A. Frankel ; Shang-Jin Wei Cambridge, Mass. National Bureau of Economic Research 2007 79 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13100 Literaturverz. S. 34 - 37 This paper examines two related issues: (a) the implicit methodology used by the U.S. Treasury in determining whether China and America's other trading partners manipulate their exchange rates, and (b) the nature of the Chinese exchange rate regime since July 2005. On the first issue, we investigate the roles of economic variables consistent with the IMF definition of manipulation - the partners' overall current account/GDP, its reserve changes, and the real overvaluation of its currency - but also some variables suggestive of American domestic political considerations -- the bilateral trade balance, US unemployment, and an election year dummy. The econometric results suggest that the Treasury verdicts are driven heavily by the US bilateral deficit, though other variables also turn out to be quite important. On the issue of China's de facto exchange rate regime, we apply the technique introduced by Frankel and Wei (1994) to estimate implicit basket weights, adding several refinements. Within 2005, the de facto regime remained a peg to the dollar. However, there was a modest but steady increase in flexibility subsequently. We test whether US pressure has promoted RMB flexibility. We also test whether the recent appreciation against the dollar is due to a trend appreciation against the reference basket or a declining weight on the dollar in the reference basket, and suggest that they have different policy implications. Wei, Shang-jin 1964- Verfasser (DE-588)128616636 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13100 (DE-604)BV002801238 13100 http://papers.nber.org/papers/w13100.pdf kostenfrei Volltext |
| spellingShingle | Frankel, Jeffrey A. 1952- Wei, Shang-jin 1964- Assessing China's exchange rate regime |
| title | Assessing China's exchange rate regime |
| title_auth | Assessing China's exchange rate regime |
| title_exact_search | Assessing China's exchange rate regime |
| title_exact_search_txtP | Assessing China's exchange rate regime |
| title_full | Assessing China's exchange rate regime Jeffrey A. Frankel ; Shang-Jin Wei |
| title_fullStr | Assessing China's exchange rate regime Jeffrey A. Frankel ; Shang-Jin Wei |
| title_full_unstemmed | Assessing China's exchange rate regime Jeffrey A. Frankel ; Shang-Jin Wei |
| title_short | Assessing China's exchange rate regime |
| title_sort | assessing china s exchange rate regime |
| url | http://papers.nber.org/papers/w13100.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT frankeljeffreya assessingchinasexchangerateregime AT weishangjin assessingchinasexchangerateregime |