Investigating the Effect of Exchange Rate Changes on the PeopleÃ¢â‚¬â„¢s Republic of ChinaÃ¢â‚¬â„¢s Processed Exports
AbstractMany argue that the yuan needs to appreciate to rebalance the Peoples Republic of Chinas trade. However, empirical evidence on the effects of a CNY appreciation on the Peoples Republic of Chinas exports has been mixed for the largest category of exports, processed exports. Since much of the value-added of these goods comes from parts and components produced in Japan, the Republic of Korea, and other East Asian supply chain countries, it is important to control for exchange rate changes in these countries. Employing dynamic ordinary least squares, or DOLS, techniques and quarterly data, this paper finds that exchange rate appreciations across supply chain countries would cause a much larger drop in processed exports than a unilateral appreciation of the yuan.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 21989.
Date of creation: Jan 2010
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China; exchange rate policy; exchange rate appreciations; trade;
Find related papers by JEL classification:
- 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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