Understanding the behavioral equilibrium exchange rate model via its application to the valuation of Chinese renminbi
AbstractIn this paper, the behavioral equilibrium exchange rate (BEER) model used in a time-series setting is investigated, via its application to the valuation of Chinese renminbi. A classical definition with its generalization is given. The different misalignment results derived from the BEER models are proven to result from the different econometric component choices. It is found that some of the misalignment results are consistent with Chinese economic facts, but some others are not. Finally, four main flaws unavoidable under the BEER model are given and analyzed.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40648.
Date of creation: 01 Jan 2010
Date of revision:
Behavioral equilibrium exchange rate; Chinese renminbi;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
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