Exchange Rate Misalignments: Historical Experience of Japan, Germany, Singapore and Taiwan Compared to China Today
AbstractThis is a comparative study on the historical experience of real effective exchange rate (REER) misalignment of Japanese yen, Deutsche mark, Singapore dollar and Taiwan dollar, with regard to the recent dispute over the Renminbi (RMB) valuation. Panel-based misalignment estimates of the four economies show that net foreign asset build-up does not necessarily result in currency misalignment, and the recent misalignment of RMB is not unprecedented in terms of magnitude, duration or currency coverage, whereas volatility in REER misalignment is likely to propagate to inflation of the home economy concerned. The assertion of 'RMB rate manipulation' thus lacks empirical support.
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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 667.
Date of creation: Jul 2010
Date of revision:
REER misalignment; RMB; Yen; D-mark; Singapore dollar; Taiwan dollar;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-CBA-2010-07-17 (Central Banking)
- NEP-MON-2010-07-17 (Monetary Economics)
- NEP-SEA-2010-07-17 (South East Asia)
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