Is the Chinese Currency Substantially Misaligned to Warrant Further Appreciation?
AbstractThis study provides quarterly time-series estimates of the misalignment in the REER of the Renminbi (RMB). The estimation is based on a commonly used economic approach, but with a wider and more up-to-date coverage of data and a more extensive use of econometric modelling techniques. Our estimates corroborate and explain most of the previous estimates. More importantly, our estimates demonstrate that there is no significant undervaluation in the REER of the RMB though downward misalignment exists in the trilateral rates between the RMB, US$ and euro. The finding refutes the claim that RMB appreciation is the primary and necessary solution to the current global trade imbalance.
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Bibliographic InfoPaper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 660.
Date of creation: Feb 2010
Date of revision:
Real exchange rate misalignment;
Other versions of this item:
- Duo Qin & Xinhua He, 2011. "Is the Chinese Currency Substantially Misaligned to Warrant Further Appreciation?," The World Economy, Wiley Blackwell, vol. 34(8), pages 1288-1307, 08.
- Qin, Duo & He, Xinhua, 2010. "Is the Chinese currency substantially misaligned to warrant further appreciation?," Economics Discussion Papers 2010-8, Kiel Institute for the World Economy.
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-27 (All new papers)
- NEP-IFN-2010-02-27 (International Finance)
- NEP-MON-2010-02-27 (Monetary Economics)
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