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Risk, Uncertainty And China'S Exports

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  • GUANGZHONG LI
  • JAN P. VOON
  • JIMMY RAN

Abstract

Both theoretical and empirical models were developed in this paper to examine how exporters’ response to real exchange rate volatility (RERV) and real exchange rate misalignment (RERM) varies across industries in China. The theoretical model indicates that the impact of RERV depends on exporters’ attitude to risk while the effect of RERM is ambiguous. Using disaggregated industry data, Chinese exporters were found to be averse to RERV and RERM. This suggests that the negative impact on China's exports resulting from a revaluation of the RMB will be mitigated by a positive impact due to the reduction of RERM.

Suggested Citation

  • Guangzhong Li & Jan P. Voon & Jimmy Ran, 2006. "Risk, Uncertainty And China'S Exports," Australian Economic Papers, Wiley Blackwell, vol. 45(2), pages 158-168, June.
    • Handle: RePEc:bla:ausecp:v:45:y:2006:i:2:p:158-168
    DOI: 10.1111/j.1467-8454.2006.00284.x
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    References listed on IDEAS

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    1. Eric van Wincoop & Philippe Bacchetta, 2000. "Does Exchange-Rate Stability Increase Trade and Welfare?," American Economic Review, American Economic Association, vol. 90(5), pages 1093-1109, December.
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    Cited by:

    1. Hsiao, Yu-Ming & Pan, Sheng-Chieh & Wu, Po-Chin, 2012. "Does the central bank's intervention benefit trade balance? Empirical evidence from China," International Review of Economics & Finance, Elsevier, vol. 21(1), pages 130-139.

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