Author
Listed:
- Andreas Rees
- Markus Taube
- Bernd Kempa
- Georg Erber
Abstract
More and more countries are beginning to weaken their currencies or to willingly accept a currency weakening. How likely is a devaluation race? Andreas Rees, UniCredit, argues for a new, multi-polar currency system that would eliminate the dominance of the US dollar. Then there would be limits to the financing of current account deficits. This would not completely eliminate devaluation races, but a balance of power would at least provide more stability. Markus Taube, University of Duisburg-Essen, points out that the institutional design of the Chinese exchange rate regime of the Chinese government offers a broad spectrum for influencing economic developments in the country. Since the foremost priority of Chinese economic policy is the promotion of the structural transformation process in the Chinese economy, there is little economic rationality for an economic-policy motivated weakening of the exchange rate of the renminbi. With the willingness of the Chinese government to shift the growth engine of the Chinese economy to the domestic market-oriented central provinces, the necessity of a further flexibilisation and revaluation of the exchange rate increases. For Bernd Kempa, University of Münster, the question of whether the current situation can lead to a devaluation race depends primarily on the future behaviour of the American and the Chinese central banks. However, in his opinion the danger of a further escalation of the currency conflict is minimal. Georg Erber, German Institute for Economic Research (DIW), Berlin, sees no sign of any change in the behaviour of the Chinese leadership - and thus a continuation of the low valuation of the Chinese currency is likely. The EU above all should have a particularly a strong interest in avoiding similarly strong trade imbalances between China and the EU member states as they now exist between China and the US.
Suggested Citation
Andreas Rees & Markus Taube & Bernd Kempa & Georg Erber, 2010.
"USA, China, India: How likely is a global devaluation race?,"
ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 63(22), pages 3-17, November.
Handle:
RePEc:ces:ifosdt:v:63:y:2010:i:22:p:3-17
Download full text from publisher
Most related items
These are the items that most often cite the same works as this one and are cited by the same works as this one.
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ifosdt:v:63:y:2010:i:22:p:3-17. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/ifooode.html .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.