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RMB Exchange Rate and Local Currency Price Stability: The Case of China and ASEAN+3

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  • Xiao Bing Feng

Abstract

This paper uses Chinese and ASEAN+3 industry panel data to measure variations in mark-up adjustment behaviour that is associated with the exchange rate changes across export destination markets. Exports that are substitutes for local products exhibit a high degree of mark-up adjustment, which has the effect of stabilising prices in export destination countries. There is evidence of this behaviour in certain export products to China where the Chinese Government provides subsidies. When markup adjustment behaviour exists, the short-term dynamic mark-up adjustments are consistent with the long-term pricing behaviour in source countries.

Suggested Citation

  • Xiao Bing Feng, 2006. "RMB Exchange Rate and Local Currency Price Stability: The Case of China and ASEAN+3," Asia Pacific Economic Papers 356, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:csg:ajrcau:356
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    File URL: https://crawford.anu.edu.au/pdf/pep/pep-356.pdf
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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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