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Theories of target zones and realignment of RMB (currency of China) exchange rate

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  • Ling Jiang
  • Lu Han
  • Daivd Jiang

Abstract

On the basis of introducing the theory of Target Zones and Exchange Rate, this paper tests for the significant to reform Chinese currency Renmingbi (RMB) exchange regime, and the possibility to build a target zone. It is pointed out that, under the tendency of economic globalization and entered WTO, it is necessary and urgent for China to realign and innovate its present exchange arrangement; target zones and its exchange rate mechanism is feasible for the reality of contemporary global economy and the situation of China. The authors analysis how to determine equilibrium of exchange rate and border of RMB target zones, and what kind of actions the Chinese government should do in such procedure.

Suggested Citation

  • Ling Jiang & Lu Han & Daivd Jiang, 2004. "Theories of target zones and realignment of RMB (currency of China) exchange rate," Applied Economics Letters, Taylor & Francis Journals, vol. 11(9), pages 561-568.
    • Handle: RePEc:taf:apeclt:v:11:y:2004:i:9:p:561-568
    DOI: 10.1080/1350485042000228808
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    References listed on IDEAS

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    1. John Williamson, 1986. "Target Zones and the Management of the Dollar," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(1), pages 165-174.
    2. Paul R. Krugman, 1991. "Target Zones and Exchange Rate Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 669-682.
    3. Rizzo, Jean-Marc, 1998. "The economic determinants of the choice of an exchange rate regime: a probit analysis," Economics Letters, Elsevier, vol. 59(3), pages 283-287, June.
    4. Miller, Marcus & Weller, Paul, "undated". "Solving Stochastic Saddlepoint Systems: A Qualitative Treatment With Economic Applications," Economic Research Papers 268343, University of Warwick - Department of Economics.
    5. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    6. Lawrence H. Summers, 2000. "International Financial Crises: Causes, Prevention, and Cures," American Economic Review, American Economic Association, vol. 90(2), pages 1-16, May.
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    Cited by:

    1. Yu Hsing & Wen-Jen Hsieh, 2009. "Currency appreciation, rising financial asset values, and output fluctuations in China," Applied Economics Letters, Taylor & Francis Journals, vol. 16(8), pages 853-857.

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