China's implicit demand for foreign reserves: neutralization and the rise in reserves
AbstractWe estimate China's demand for foreign reserves from 1994:1 to 2007:4. Using a monetary model for China's reserve demand, we take into account the People's Bank of China's systematic neutralization policy to reduce inflation. While ultimately inconsistent, this policy has led to a growth in foreign exchange reserves that seems limitless: a neutralization coefficient of 0.57 leading to a “magnification effect” on the increase in reserves of 2.3. That is, a purchase of foreign reserves leads to a contraction of domestic credit of 57% of the foreign exchange purchase, which in turn magnifies the surplus under a stable exchange rate.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.
Volume (Year): 11 (2008)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.tandfonline.com/GPRE19
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.