Investigating the Effect of Exchange Rate Changes on the People's Republic of China's Processed Exports
AbstractMany argue that the yuan needs to appreciate to rebalance the People's Republic of China's trade. However, empirical evidence on the effects of a CNY appreciation on the People's Republic of China's exports has been mixed for the largest category of exports, processed exports. Since much of the value-added of these goods comes from parts and components produced in Japan, the Republic of Korea, and other East Asian supply chain countries, it is important to control for exchange rate changes in these countries. Employing dynamic ordinary least squares, or DOLS, techniques and quarterly data, this paper finds that exchange rate appreciations across supply chain countries would cause a much larger drop in processed exports than a unilateral appreciation of the yuan.
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Bibliographic InfoPaper provided by Asian Development Bank Institute in its series ADBI Working Papers with number 202.
Length: 17 pages
Date of creation: 03 Mar 2010
Date of revision:
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exchange rate changes prc; prc processed exports; global imbalances; exchange rate elasticities; china;
Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- 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-2010-04-17 (All new papers)
- NEP-IFN-2010-04-17 (International Finance)
- NEP-INT-2010-04-17 (International Trade)
- NEP-MIC-2010-04-17 (Microeconomics)
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