Are Chinese Imports Sensitive To Exchange Rate Changes?
Estimating the price elasticity of China's imports is difficult because many imports are used to produce exports and because the real effective exchange rate has remained fairly stable. To circumvent the first problem, we control for re-exports, and to increase the discriminatory power of the tests, we employ a panel data set including imports from 25 countries. The results indicate that a 10% RMB appreciation would increase imports for processing and ordinary imports by 3%–4%. As China climbs the value chain, the potential for import substitution and hence the import price elasticity should increase. Thus a renminbi appreciation should help to raise China's imports and rebalance its economy.
Volume (Year): 01 (2012)
Issue (Month): 02 ()
|Contact details of provider:|| Web page: http://www.worldscinet.com/cepr/cepr.shtml|
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wagner, Martin & Hlouskova, Jaroslava, 2007.
"The Performance of Panel Cointegration Methods. Results from a Large Scale Simulation Study,"
210, Institute for Advanced Studies.
- Martin Wagner & Jaroslava Hlouskova, 2010. "The Performance of Panel Cointegration Methods: Results from a Large Scale Simulation Study," Econometric Reviews, Taylor & Francis Journals, vol. 29(2), pages 182-223, April.
- Thorbecke, Willem, 2011. "Investigating the effect of exchange rate changes on china's processed exports," Journal of the Japanese and International Economies, Elsevier, vol. 25(2), pages 33-46, June.
- Willem Thorbecke & Gordon Smith, 2010. "How Would an Appreciation of the Renminbi and Other East Asian Currencies Affect China's Exports?," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 95-108, 02.
- Guillaume Gaulier & Françoise Lemoine & Deniz Ünal, 2011. "China's Foreign Trade in the Perspective of a More Balanced Economic Growth," Working Papers 2011-03, CEPII research center.
- Koichiro Kamada & Izumi Takagawa, 2005.
"Policy Coordination in East Asia and across the Pacific,"
Hi-Stat Discussion Paper Series
d05-101, Institute of Economic Research, Hitotsubashi University.
- Koichiro Kamada & Izumi Takagawa, 2005. "Policy coordination in East Asia and across the Pacific," International Economics and Economic Policy, Springer, vol. 2(4), pages 275-306, December.
- Koichiro Kamada & Izumi Takagawa, 2005. "Policy Coordination in East Asia and across the Pacific," Bank of Japan Working Paper Series 05-E-4, Bank of Japan.
When requesting a correction, please mention this item's handle: RePEc:wsi:ceprxx:v:01:y:2012:i:02:p:1250012-1-1250012-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim)
If references are entirely missing, you can add them using this form.