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Chinese Yuan after Chinese Exchange Rate System Reform

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  • Eiji Ogawa
  • Michiru Sakane

Abstract

In this paper, the actual exchange rate policy conducted by the Chinese government after the Chinese exchange rate system reform on 21 July 2005 is investigated. Also, the long-run effect is investigated, including the Balassa-Samuelson effect on the Chinese yuan. It was found that the Chinese government generated a statistically significant but small change in exchange rate policy during the sample period until 25 January 2006. It was not identified that the Chinese monetary authority is adopting the currency basket system because the change is too small in the economic sense. It is indicated that the Chinese government should take account of the productivity growth of countries composing the currency basket in order to operate a currency basket regime. Copyright The official journal of The Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS) 2006.

Suggested Citation

  • Eiji Ogawa & Michiru Sakane, 2006. "Chinese Yuan after Chinese Exchange Rate System Reform," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(6), pages 39-57.
  • Handle: RePEc:bla:chinae:v:14:y:2006:i:6:p:39-57
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    Citations

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    Cited by:

    1. Tian, Lei & Chen, Langnan, 2013. "A reinvestigation of the new RMB exchange rate regime," China Economic Review, Elsevier, vol. 24(C), pages 16-25.
    2. Jeffrey Frankel & Daniel Xie, 2010. "Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes," American Economic Review, American Economic Association, vol. 100(2), pages 568-572, May.
    3. Jarko Fidrmuc & Martin Siddiqui, 2015. "Exchange Rate Policy in China after the Financial Crisis: Evidence from Time-varying Exchange Rate Basket," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 608-623, August.
    4. Eiji Ogawa & Kentaro Kawasaki, 2008. "Adopting a Common Currency Basket Arrangement into the ASEAN Plus Three," NBER Chapters,in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy (NBER-EASE Volume 17), pages 219-237 National Bureau of Economic Research, Inc.
    5. Jeffrey A. Frankel, 2009. "New Estimation Of China'S Exchange Rate Regime," Pacific Economic Review, Wiley Blackwell, vol. 14(3), pages 346-360, August.
    6. Fang, Ying & Huang, Shicheng & Niu, Linlin, 2012. "De facto currency baskets of China and East Asian economies : The rising weights," BOFIT Discussion Papers 2/2012, Bank of Finland, Institute for Economies in Transition.
    7. Eiji Ogawa, 2011. "Currency Baskets for East Asia," Chapters,in: Regional Integration, Economic Development and Global Governance, chapter 14 Edward Elgar Publishing.
    8. Jeffrey A. Frankel, 2017. "Systematic Managed Floating," NBER Working Papers 23663, National Bureau of Economic Research, Inc.
    9. Marco Mele, 2014. "On China’s Exchange Rate Regime: Is Euro outside?," International Economics Letters, Transnational Press London, UK, vol. 3(2), pages 49-58, October.
    10. Ulrich Volz (ed.), 2011. "Regional Integration, Economic Development and Global Governance," Books, Edward Elgar Publishing, number 14259.
    11. OGAWA Eiji & Zhiqian WANG, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Discussion papers 12078, Research Institute of Economy, Trade and Industry (RIETI).
    12. OGAWA Eiji & SHIMIZU Junko, 2007. "Progress toward a Common Currency Basket System in East Asia," Discussion papers 07002, Research Institute of Economy, Trade and Industry (RIETI).
    13. repec:wsi:ceprxx:v:01:y:2012:i:02:n:s1793969012500112 is not listed on IDEAS
    14. OGAWA, Eiji & WANG, Zhiqian, 2014. "How Did the Global Financial Crisis Misalign East Asian Currencies?," Working Paper Series G-1-8, Center for Financial Research, Graduate School of Commerce and Management, Hitotsubashi University.
    15. Eiji Ogawa & Junko Shimizu, 2006. "Stabilization of Effective Exchange Rates Under Common Currency Basket Systems," NBER Working Papers 12198, National Bureau of Economic Research, Inc.
    16. Eiji Ogawa & Zhiqian Wang, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Global COE Hi-Stat Discussion Paper Series gd12-255, Institute of Economic Research, Hitotsubashi University.

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