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China'S New Exchange Rate Policy: Will China Follow Japan Into A Liquidity Trap?

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  • RONALD I. MCKINNON

    ()
    (Department of Economics, Landau Economics Building, Stanford University, Stanford, CA 94305-6072, USA)

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    Abstract

    Todays' American mercantile pressure on China to appreciate the renminbi against the dollar is eerily similar to the American pressure on Japan to appreciate the yen that began over 30 years ago. There are some differences between the two cases, but downward pressure on Chinese interest rates from foreign exchange risk could lead China into a zero interest rate liquidity trap much like the one that Japan has suffered since the mid-1990s.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal The Singapore Economic Review.

    Volume (Year): 50 (2005)
    Issue (Month): sp ()
    Pages: 463-474

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    Handle: RePEc:wsi:serxxx:v:50:y:2005:i:sp:p:463-474

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    Related research

    Keywords: Exchange rates; China; Japan; interest rates; liquidity trap; deflation;

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    Cited by:
    1. Mestiri, Sana & Bouveret, Antoine & Sterdyniak, Henri, 2006. "La valeur du yuan. Les paradoxes du taux de change d’équilibre," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/5512, Paris Dauphine University.
    2. Bouveret, Antoine & Sterdyniak, Henri & Mestiri, Sana, 2007. "The renminbi equilibrium exchange rate : an agnostic view," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/5487, Paris Dauphine University.
    3. repec:spo:wpecon:info:hdl:2441/5121 is not listed on IDEAS

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