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The Difficulties of the Chinese and Indian Exchange Rate Regimes

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  • Ajay Shah

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  • Ila Patnaik

    ()

Abstract

China and India have both attempted distorting the exchange rate in order to foster exports-led growth. This is described as the Bretton Woods II framework, where developing countries buy bonds in the US and keep undervalued exchange rates, in order to foster export-led growth. The costs and benefits of this approach need to factor in the extent to which monetary policy is distorted by the pursuit of exchange rate policy. In this paper, dates of structural change are identified, and the characteristics of the de facto exchange rate regime, for both countries are examined. These results utilise recent developments in the econometrics of structural change. Business cycle conditions and the short-term rate (expressed in real terms) in both India and China are also examined. [NIPFP WP No 2009-62].

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Paper provided by eSocialSciences in its series Working Papers with number id:2321.

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Date of creation: Nov 2009
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Handle: RePEc:ess:wpaper:id:2321

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Keywords: GDP; RBI; indian; exports; china; India; exchange rte; bretton woods; US; monetary policy; developing countries; de facto; business cycle;

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  13. Ajay Shah & Ila Patnaik & Rudrani Bhattacharya, 2008. "Early Warnings of Inflation in India," Working Papers, eSocialSciences id:1682, eSocialSciences.
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Citations

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Cited by:
  1. Ila Patnaik & Ajay Shah, 2010. "Asia Confronts the Impossible Trinity," Macroeconomics Working Papers, East Asian Bureau of Economic Research 22814, East Asian Bureau of Economic Research.
  2. Ila Patnaik & Ajay Shah, 2012. "Did the Indian Capital Controls Work as a Tool of Macroeconomic Policy?," IMF Economic Review, Palgrave Macmillan, Palgrave Macmillan, vol. 60(3), pages 439-464, September.
  3. Heshmati, Almas & Kumbhakar, Subal C., 2010. "Technical Change and Total Factor Productivity Growth: The Case of Chinese Provinces," IZA Discussion Papers, Institute for the Study of Labor (IZA) 4784, Institute for the Study of Labor (IZA).
  4. Enrico Marelli & Marcello Signorelli, 2011. "China and India: Openness, Trade and Effects on Economic Growth," European Journal of Comparative Economics, Cattaneo University (LIUC), Cattaneo University (LIUC), vol. 8(1), pages 129-154, June.
  5. Shirai, Sayuri, 2009. "世界経済危機とグローバル・マネーの変動 ―国際経済秩序へのインプリケーションー
    [Global Economic Crisis and Movements of Cross-Border Capital Flows ―Implicatio
    ," MPRA Paper, University Library of Munich, Germany 18619, University Library of Munich, Germany.

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