China's External Surplus: Simulations with a Global Macroeconomic Model
AbstractThe paper analyses China's external position in a multi-region macroeconomic model of the world economy. The model includes a portfolio structure and Forex intervention to proxy net/gross and government/non-government foreign asset positions, capital controls and exchange rate management in China. The selected set of transition and globalisation shocks replicates China's external position well, suggesting that it reflects capital exports driven by shifts in domestic saving supply, rather than shifts in foreign saving demand. The simulations also highlight the importance of effective capital controls for the viability of China's exchange rate management. Finally, the analysis suggests that enhanced flexibility of the RMB exchange rate could reduce China's net creditor position.
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Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 430.
Length: 37 pages
Date of creation: Dec 2010
Date of revision:
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Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-05 (All new papers)
- NEP-IFN-2011-03-05 (International Finance)
- NEP-OPM-2011-03-05 (Open Economy Macroeconomic)
- NEP-TRA-2011-03-05 (Transition Economics)
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- Turhan, Ibrahim M. & Arslan, Yavuz & Kılınç, Mustafa, 2011.
"Global Imbalances, Current Account Rebalancing and Exchange Rate Adjustments,"
36475, University Library of Munich, Germany.
- Yavuz Arslan & Mustafa Kilinc & M. Ibrahim Turhan, 2011. "Global Imbalances, Current Account Rebalancing and Exchange Rate Adjustments," Working Papers 1127, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
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