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How does real exchange rate influence income inequality between urban and rural areas in China?

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  • Guillaumont Jeanneney, S.
  • Hua, P.

Abstract

The channels through which the real exchange rate influences urban/rural per capita real income inequality are analyzed using yearly data for 28 Chinese provinces. Due to the higher share of tradable goods produced in urban than rural areas, the real depreciation of the Chinese currency raised the urban bias, contrary to the effect usually expected. This rise was, however, mitigated because of the impact of the exchange rate on the urban/rural consumer price ratio, real public wages, and the ratio of industrial/agricultural protection rates. It disappeared for coastal provinces due to the strong development of outward-oriented rural industrial activities.
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Suggested Citation

  • Guillaumont Jeanneney, S. & Hua, P., 2001. "How does real exchange rate influence income inequality between urban and rural areas in China?," Journal of Development Economics, Elsevier, vol. 64(2), pages 529-545, April.
  • Handle: RePEc:eee:deveco:v:64:y:2001:i:2:p:529-545
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    Cited by:

    1. Yue, Changjun & Hua, Ping, 2002. "Does comparative advantage explains export patterns in China?," China Economic Review, Elsevier, vol. 13(2-3), pages 276-296.
    2. Roberto Álvarez & Ricardo A. López, 2009. "Skill Upgrading and the Real Exchange Rate," The World Economy, Wiley Blackwell, vol. 32(8), pages 1165-1179, August.
    3. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," Working Papers halshs-00667467, HAL.
    4. Huang, Lin & Wu, Jia & Zhang, Rui, 2014. "Exchange risk and asset returns: A theoretical and empirical study of an open economy asset pricing model," Emerging Markets Review, Elsevier, vol. 21(C), pages 96-116.
    5. Guerineau, Samuel & Guillamont Jeanneney, Sylviane, 2005. "Deflation in China," China Economic Review, Elsevier, vol. 16(4), pages 336-363.
    6. Caldeira, Emilie, 2012. "Yardstick competition in a federation: Theory and evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 878-897.
    7. Sylviane Guillaumont Jeanneney & Ping Hua, 2002. "L'effet Balassa-Samuelson et les différences d'inflation entre les provinces chinoises," Revue d’économie du développement, De Boeck Université, vol. 10(3), pages 33-60.
    8. Ping HUA & Sylviane GUILLAUMONT JEANNENEY, 2008. "Appreciation of the renminbi and urban-rural income disparity," Working Papers 200824, CERDI.
    9. Guillaumont Jeanney, Sylviane & HUA, Ping, 2002. "The Balassa-Samuelson effect and inflation in the Chinese provinces," China Economic Review, Elsevier, vol. 13(2-3), pages 134-160.
    10. Guillaumont Jeanneney, Sylviane & Hua, Ping, 2011. "How does real exchange rate influence labour productivity in China?," China Economic Review, Elsevier, vol. 22(4), pages 628-645.
    11. Jinzhao Chen, 2012. "Real Exchange Rate and Economic Growth: Evidence from Chinese Provincial Data (1992 - 2008)," PSE Working Papers halshs-00667467, HAL.
    12. Patrick GUILLAUMONT & Christopher GRIGORIOU, 2008. "Child Mortality Reacts to Relative Prices," Working Papers 200814, CERDI.
    13. Ping HUA & YUE, 2001. "Does Comparative Advantage Explain Export Patterns in China?," Working Papers 200108, CERDI.
    14. Lin Yuan & Xiaolin Qian & Nitin Pangarkar, 2016. "Market Timing and Internationalization Decisions: A Contingency Perspective," Journal of Management Studies, Wiley Blackwell, vol. 53(4), pages 497-519, June.
    15. Grigoriou, Christopher & Guillaumont, Patrick & Yang, Wenyan, 2005. "Child mortality under Chinese reforms," China Economic Review, Elsevier, vol. 16(4), pages 441-464.
    16. Ping HUA, 2005. "Real exchange rate and employment in the manufacturing sector in China," Working Papers 200528, CERDI.
    17. Sylviane GUILLAUMONT JEANNENEY & Ping HUA, 2003. "Real exchange rate and productivity in China," Working Papers 200328, CERDI.
    18. Hua, Ping, 2007. "Real exchange rate and manufacturing employment in China," China Economic Review, Elsevier, vol. 18(3), pages 335-353.
    19. Kim, Iljoong & Kim, Inbae, 2008. "Interest group pressure explanations for the yen-dollar exchange rate movements: Focusing on the 1980s," Journal of the Japanese and International Economies, Elsevier, vol. 22(3), pages 364-382, September.
    20. Laurent CORTESE & Ping HUA, 2002. "The Effect of the Real Exchange Rate on Technological Progress. An Application to the Textile Industry in China," Working Papers 200207, CERDI.
    21. Sylviane GUILLAUMONT JEANNENEY & Samuel GUERINEAU, 2003. "Deflation in China," Working Papers 200323, CERDI.

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