IDEAS home Printed from https://ideas.repec.org/h/eme/isetez/s1571-038620180000025003.html
   My bibliography  Save this book chapter

The Macroeconomic Effects of RMB Internationalization: The Perspective of Overseas Circulation

In: Banking and Finance Issues in Emerging Markets

Author

Listed:
  • Cong Wang
  • Xue Wang

Abstract

The RMB Internationalization has a great impact on China’s domestic economy. This chapter applies the Gap Estimation approach to estimate the RMB overseas circulation amount from 1997 to 2015, as the indicator of RMB internationalization. Using the recently developed Directed Acyclic Graph (DAG) method for the model identification and contemporaneous causality analysis. The structural vector auto regression (SVAR) model is constructed between the economic indicators (the interest rate, the CPI, and the exchange rate) and the RMB overseas circulation. The dynamic relationship and degree of mutual influence are further studied between the economic indicators and overseas circulation. The results show that there exist contemporaneous causalities of “from RMB overseas circulation to inflation rate,” “from exchange rate to overseas circulation,” and “from exchange rate to the inflation rate.” The influence of interest rate adjustment on macro economy presents the time lag effect. The internationalization of the RMB encourages the currency appreciation. The China’s Central Bank passively looses monetary policy to meet the needs of internationalization and reduce the shock of the international hot money, thereby further deepening the domestic inflation.

Suggested Citation

  • Cong Wang & Xue Wang, 2018. "The Macroeconomic Effects of RMB Internationalization: The Perspective of Overseas Circulation," International Symposia in Economic Theory and Econometrics, in: Banking and Finance Issues in Emerging Markets, volume 25, pages 31-50, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620180000025003
    DOI: 10.1108/S1571-038620180000025003
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620180000025003/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620180000025003/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S1571-038620180000025003
    Download Restriction: no
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1571-038620180000025003/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: no
    File URL: https://libkey.io/10.1108/S1571-038620180000025003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ding, Shusheng & Cui, Tianxiang & Zhang, Yongmin, 2020. "Incorporating the RMB internationalization effect into its exchange rate volatility forecasting," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).

    More about this item

    Keywords

    RMB internationalization; Overseas circulation of RMB; Gap Estimation approach; Directed acyclic graph; Causality analysis; SVAR; E42; F33;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

    Statistics

    Access and download statistics

    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:eme:isetez:s1571-038620180000025003. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.