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The Renminbi and Poor‐country Growth

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Author Info

  • Christopher Garroway
  • Burcu Hacibedel
  • Helmut Reisen
  • Edouard Turkisch

Abstract

Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB undervaluation and China’s GDP growth rate; surveys the role of the real effective exchange rate – both its level and its stability over time – for underpinning growth in developing countries, especially in large dual economies such as China and India; finally, the paper presents new evidence on growth linkages between China and poor countries for the last two decades and surveys literature on potential displacement effects of RMB appreciation. The analysis allows broad conclusions to be drawn about the potential developing-country beneficiaries and losers from various renminbi adjustment scenarios in the forthcoming years. Les discussions sur la meilleure façon de sortir des déséquilibres mondiaux afin de créer une économie mondiale plus équilibrée ont ignoré l'impact sur les pays pauvres des propositions visant à corriger ces déséquilibres. Le présent document vise à combler ce manque. Il évalue d’abord le degré de sous-évaluation du renminbi (RMB) ; il décrit ensuite les évolutions simultanées du degré de sous-évaluation du RMB et du taux de croissance du PIB chinois ; puis, il passe en revue le rôle du taux de change effectif réel - à la fois son niveau et sa stabilité au cours du temps – dans la croissance des pays en développement, surtout dans les grandes économies duales comme la Chine et l'Inde ; enfin, le document présente de nouvelles analyses sur les liens, au cours des deux dernières décennies, entre la croissance chinoise et celle des pays pauvres et passe en revue la littérature traitant des effets potentiels de l'appréciation du RMB sur la croissance. L'analyse permet d’identifier parmi les pays en développement, le

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 35 (2012)
Issue (Month): 3 (03)
Pages: 273-294

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Handle: RePEc:bla:worlde:v:35:y:2012:i:3:p:273-294

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References

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  1. Andrew Berg & Yanliang Miao, 2010. "The Real Exchange Rate and Growth Revisited," IMF Working Papers 10/58, International Monetary Fund.
  2. Ronald McKinnon & Gunther Schnabl, 2009. "The Case for Stabilizing China's Exchange Rate: Setting the Stage for Fiscal Expansion," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(1), pages 1-32.
  3. Irving B. Kravis & Robert E. Lipsey, 1982. "Towards an Explanation of National Price Levels," NBER Working Papers 1034, National Bureau of Economic Research, Inc.
  4. David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
  5. Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
  6. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
  7. Ajay Chhibber & Gaurav Nayyar, 2008. "Pro-poor growth: explaining the cross-country variation in the growth elasticity of poverty," International Journal of Development Issues, Emerald Group Publishing, vol. 7(2), pages 160-176, October.
  8. Angus Deaton & Alan Heston, 2010. "Understanding PPPs and PPP-Based National Accounts," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 1-35, October.
  9. Angus Maddison & Harry X. Wu, 2008. "Measuring China’s Economic Performance," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 9(2), pages 13-44, April.
  10. William R. Cline & John Williamson, 2010. "Notes on Equilibrium Exchange Rates: January 2010," Policy Briefs PB10-2, Peterson Institute for International Economics.
  11. Jinzhao Chen, 2007. "Behavior Equilibrium Exchange Rate and Misalignment of Renminbi: A Recent Empirical Study," DEGIT Conference Papers c012_013, DEGIT, Dynamics, Economic Growth, and International Trade.
  12. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Global Rebalancing: A Modest Role for the RMB
    by Shifting Wealth in ShiftingWealth on 2011-05-18 12:42:00
  2. The world now grows in Fosbury style
    by Shifting Wealth in ShiftingWealth on 2011-04-05 09:59:00
  3. PBoC sets the RMB free and it ... falls
    by Shifting Wealth in ShiftingWealth on 2012-04-16 09:14:00
  4. MGG Public Lecture (30 July 2012, at GDI/DIE)
    by Shifting Wealth in ShiftingWealth on 2012-07-29 12:43:00
  5. Toward Shifting Wealth Phase II
    by Shifting Wealth in ShiftingWealth on 2012-08-10 14:06:00
  6. Is the Asian Market Slump Due to China´s Monetary Policy?
    by Shifting Wealth in ShiftingWealth on 2013-08-21 15:25:00
  7. Euphoric End-of-Poverty Declarations May Be Based on Wrong Premises
    by Shifting Wealth in ShiftingWealth on 2014-01-18 18:22:00
  8. Euphoric End-of-Poverty Declarations May Be Based on Wrong Premises
    by Guest author in OECD Insights on 2014-02-03 06:53:54
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Zhang, Zhibai & Chen, Langnan, 2013. "A New Assessment of the Chinese RMB Exchange Rate," MPRA Paper 49315, University Library of Munich, Germany.
  2. Marcus Kappler & Helmut Reisen & Moritz Schularick & Edouard Turkisch, 2011. "The Macroeconomic Effects of Large Exchange Rate Appreciations," OECD Development Centre Working Papers 296, OECD Publishing.
  3. Zhang, Zhibai, 2012. "A simple model and its application in currency valuation," MPRA Paper 40650, University Library of Munich, Germany.
  4. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.
  5. repec:hal:wpaper:halshs-00667467 is not listed on IDEAS
  6. Zhibai, Zhang, 2012. "A Simple Model and Its Application in the Valuation of Five Asian Real Exchange Rates," MPRA Paper 40953, University Library of Munich, Germany.
  7. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.

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