Are Chinese Imports Sensitive To Exchange Rate Changes?
AbstractEstimating the price elasticity of China's imports is difficult because many imports are used to produce exports and because the real effective exchange rate has remained fairly stable. To circumvent the first problem, we control for re-exports, and to increase the discriminatory power of the tests, we employ a panel data set including imports from 25 countries. The results indicate that a 10% RMB appreciation would increase imports for processing and ordinary imports by 3%–4%. As China climbs the value chain, the potential for import substitution and hence the import price elasticity should increase. Thus a renminbi appreciation should help to raise China's imports and rebalance its economy.
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Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal China Economic Policy Review.
Volume (Year): 01 (2012)
Issue (Month): 02 ()
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Web page: http://www.worldscinet.com/cepr/cepr.shtml
Other versions of this item:
- THORBECKE, Willem & SMITH, Gordon, 2012. "Are Chinese Imports Sensitive to Exchange Rate Changes?," Discussion papers 12007, Research Institute of Economy, Trade and Industry (RIETI).
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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