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Renminbi misaligned - Results from meta-regressions

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Author Info

  • Korhonen, Iikka

    ()
    (BOFIT)

  • Ritola, Maria

    (BOFIT)

Abstract

We collect data from 29 separate papers estimating the equilibrium level and possible undervaluation of the Chinese currency, the renminbi. These papers yield a total of 97 individual observations on misalignment, which we analyse with the help of meta-analysis. We find that the vast majority of observations point to renminbi undervaluation in recent years and that the undervaluation is more pronounced when the US dollar exchange rate is used instead of the real effective exchange rate. We find several characteristics of papers and authors that clearly seem to influence the reported misalignments. For example, when the author is affiliated with an investment bank, the reported misalignment is smaller. Using time-series techniques also results in lower estimates of undervaluation. On the other hand, refereed journals seemingly are inclined to publish papers that report larger misalignments. Results caution against trusting too much in any one study concerning renminbi undervaluation.

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Bibliographic Info

Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 13/2009.

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Length: 27 pages
Date of creation: 10 Sep 2009
Date of revision:
Handle: RePEc:hhs:bofitp:2009_013

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Keywords: equilibrium exchange rate; exchange rate misalignment; meta-analysis; China;

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References

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  1. Égert, Balázs & Halpern, László, 2005. "Equilibrium exchange rates in Central and Eastern Europe: A meta-regression analysis," BOFIT Discussion Papers 4/2005, Bank of Finland, Institute for Economies in Transition.
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  3. Horvath, Roman & Komarek, Lubos, 2006. "Equilibrium Exchange Rates in EU New Members: Applicable for Setting the ERM II Central Parity?," MPRA Paper 1180, University Library of Munich, Germany.
  4. Virginie Coudert & Cécile Couharde, 2005. "Real Equilibrium Exchange Rate in China," Working Papers 2005-01, CEPII research center.
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  7. Wang, Yajie & Hui, Xiaofeng & Soofi, Abdol S., 2007. "Estimating renminbi (RMB) equilibrium exchange rate," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 417-429.
  8. Jarko Fidrmuc & Iikka Korhonen, 2006. "Meta-Analysis of the Business Cycle Correlation between the Euro Area and the CEECs," CESifo Working Paper Series 1693, CESifo Group Munich.
  9. Rod Tyers & Yongxiang Bu & Ian Bain, 2006. "China’s Equilibrium Real Exchange Rate: A Counterfactual Analysis," ANU Working Papers in Economics and Econometrics 2006-466, Australian National University, College of Business and Economics, School of Economics.
  10. Bineau, Yannick, 2010. "Renminbi's misalignment: A meta-analysis," Economic Systems, Elsevier, vol. 34(3), pages 259-269, September.
  11. Hinkle, Lawrence E. & Monteil, Peter J. (ed.), 1999. "Exchange Rate Misalignment: Concepts and Measurement for Developing Countries," OUP Catalogue, Oxford University Press, number 9780195211269.
  12. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
  13. Chou, W. L. & Shih, Y. C., 1998. "The Equilibrium Exchange Rate of the Chinese Renminbi," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 165-174, March.
  14. Zhang, Zhichao, 2001. "Real Exchange Rate Misalignment in China: An Empirical Investigation," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 80-94, March.
  15. Markus Knell & Helmut Stix, 2005. "The Income Elasticity of Money Demand: A Meta-Analysis of Empirical Results ," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 513-533, 07.
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Citations

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Cited by:
  1. Cheung , Yin-Wong & Fujii, Eiji, 2011. "Exchange rate misalignment estimates – Sources of differences," BOFIT Discussion Papers 25/2011, Bank of Finland, Institute for Economies in Transition.
  2. Feldkircher, Martin & Korhonen, Iikka, 2012. "The rise of China and its implications for emerging markets - Evidence from a GVAR model," BOFIT Discussion Papers 20/2012, Bank of Finland, Institute for Economies in Transition.
  3. Jarko Fidrmuc, 2010. "Time-Varying Exchange Rate Basket in China from 2005 to 2009," Comparative Economic Studies, Palgrave Macmillan, vol. 52(4), pages 515-529, December.
  4. Körner, Finn Marten & Ehnts, Dirk H., 2013. "Chinese monetary policy – from theory to practice," MPRA Paper 44264, University Library of Munich, Germany.

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