China's Exchange Rate Policy: A Survey of the Literature
China's integration into the world economy has benefited its people by reducing poverty and raising living standards, and it has benefited the industrialized world by producing manufactured goods at lower cost. It has also raised geopolitical concerns as China's power grows, economic concerns as the manufacturing base in many industrialized countries erodes, and polemics as proposals of protectionist measures to counter China's export growth are put forward. The author reviews the literature on how China's exchange rate regime could evolve and contribute, through greater flexibility, to tempering domestic inflationary pressures and to facilitating an orderly resolution of global imbalances. His main conclusions are that China would benefit from moving towards a more flexible exchange rate regime and allowing the People's Bank of China greater independence to pursue an inflation-control objective. In a transition phase, a managed float would be useful to limit volatility as firms adapt to the new system and the banking system is put on a sounder footing, a monetary policy framework is put in place, and capital controls are progressively eased. Shock therapy (a quick and pronounced revaluation) would be ill advised.
|Date of creation:||2008|
|Contact details of provider:|| Postal: 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada|
Phone: 613 782-8845
Fax: 613 782-8874
Web page: http://www.bank-banque-canada.ca/
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.:
- Marvin Goodfriend & Eswar Prasad, 2009.
"A Framework for Independent Monetary Policy in China,"
in: Monetary Policy Frameworks for Emerging Markets, chapter 8
Edward Elgar Publishing.
- Marvin Goodfriend & Eswar Prasad, 2007. "A Framework for Independent Monetary Policy in China," CESifo Economic Studies, CESifo, vol. 53(1), pages 2-41, March.
- Marvin S Goodfriend & Eswar S Prasad, 2006. "A Framework for Independent Monetary Policy in China," IMF Working Papers 06/111, .
- Mark Zelmer & Andrea Schaechter, 2000. "Adopting Inflation Targeting; Practical Issues for Emerging Market Countries," IMF Occasional Papers 202, International Monetary Fund.
- Frederic S. Mishkin, 2000.
"Inflation Targeting in Emerging Market Countries,"
NBER Working Papers
7618, National Bureau of Economic Research, Inc.
- Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007.
"The Overvaluation of Renminbi Undervaluation,"
NBER Working Papers
12850, National Bureau of Economic Research, Inc.
- Yin-wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007. "The Overvaluation of Renminbi Undervaluation," Working Papers 112007, Hong Kong Institute for Monetary Research.
- Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2007. "The Overvaluation of Renminbi Undervaluation," CESifo Working Paper Series 1918, CESifo Group Munich.
- Michael Mussa & Giovanni Dell'Ariccia & Barry J. Eichengreen & Enrica Detragiache, 1998. "Capital Account Liberalization; Theoretical and Practical Aspects," IMF Occasional Papers 172, International Monetary Fund.
- Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 145-170, March.
- Jaime R. Marquez & John W. Schindler, 2006. "Exchange-rate effects on China's trade: an interim report," Working Paper Series 2006-41, Federal Reserve Bank of San Francisco.
- K.C. Fung & LawrenceJ. Lau & Yanyan Xiong, 2006. "Adjusted Estimates Of United States-China Bilateral Trade Balances: An Update," Pacific Economic Review, Wiley Blackwell, vol. 11(3), pages 299-314, October.
- Bojan Markovic & Laura Povoledo, 2007.
"Does Asia's choice of exchange rate regime affect Europe's exposure to US shocks?,"
Bank of England working papers
318, Bank of England.
- Bojan Markovic & Laura Povoledo, 2011. "Does Asias choice of exchange rate regime affect Europes exposure to US shocks?," Economic Issues Journal Articles, Economic Issues, vol. 16(2), pages 1-38, September.
- Olivier Blanchard & Francesco Giavazzi, 2006.
"Rebalancing Growth in China: A Three-Handed Approach,"
China & World Economy,
Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(4), pages 1-20.
- Blanchard, Olivier J & Giavazzi, Francesco, 2006. "Rebalancing Growth in China: A Three-Handed Approach," CEPR Discussion Papers 5403, C.E.P.R. Discussion Papers.
- Glenn Hoggarth & Hui Tong, 2007. "The impact of yuan revaluation on the Asian region," Bank of England working papers 329, Bank of England.
- Ronald McKinnon, 2006.
"China'S Exchange Rate Appreciation In The Light Of The Earlier Japanese Experience,"
Pacific Economic Review,
Wiley Blackwell, vol. 11(3), pages 287-298, October.
- McKinnon, Ronald, 2006. "China's Exchange Rate Appreciation in the Light of the Earlier Japanese Experience," ZEW Discussion Papers 06-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Wagstaff, Adam & Pradhan, Menno, 2005. "Health insurance impacts on health and nonmedical consumption in a developing country," Policy Research Working Paper Series 3563, The World Bank.
- Morris Goldstein, 2004. "Adjusting China's Exchange Rate Policies," Working Paper Series WP04-1, Peterson Institute for International Economics.
- Maurice Obstfeld, 2007.
"The Renminbi fs Dollar Peg at the Crossroads,"
Monetary and Economic Studies,
Institute for Monetary and Economic Studies, Bank of Japan, vol. 25(S1), pages 29-56, December.
- Raghuram G. Rajan & Eswar S. Prasad, 2005.
"Controlled Capital Account Liberalisation: A Proposal,"
- Eswar S Prasad & Raghuram Rajan, 2005. "Controlled Capital Account Liberalization; A Proposal," IMF Policy Discussion Papers 05/7, International Monetary Fund.
- Philippe Bacchetta & Eric van Wincoop, 2006.
"Incomplete information processing: a solution to the forward discount puzzle,"
Federal Reserve Bank of San Francisco, issue Jun.
- Philippe Bacchetta & Eric van Wincoop, 2006. "Incomplete information processing: a solution to the forward discount puzzle," Working Paper Series 2006-35, Federal Reserve Bank of San Francisco.
- Philippe Bacchetta & Eric van Wincoop, 2005. "Incomplete Information Processing: A Solution to the Forward Discount Puzzle," Working Papers 05.03, Swiss National Bank, Study Center Gerzensee.
- Alan Ahearne & Yung Chul Park & William R. Cline & Jean Pisani-Ferry & Kyung Tae Lee & John Williamson, 2007.
"Global imbalances: time for action,"
- Wendy Dobson & Anil K Kashyap, 2006.
"The Contradiction in China’s Gradualist Banking Reforms,"
Working Papers Series
08, Rotman Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
- Wendy Dobson & Anil K. Kashyap, 2006. "The Contradiction in China's Gradualist Banking Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 103-162.
- MD. Chinn, 2000. "Three measures of East Asian currency evaluation," Contemporary Economic Policy, Western Economic Association International, vol. 18(2), pages 205-214, 04.
- Lamin Y Leigh & Steven V Dunaway & Xiangming Li, 2006. "How Robust are Estimates of Equilibrium Real Exchange Rates; The Case of China," IMF Working Papers 06/220, .
- Hausmann, Ricardo & Lim, Edwin & Spence, Michael, 2006. "China and the Global Economy: Medium-Term Issues and Options--A Synthesis Report," Working Paper Series rwp06-029, Harvard University, John F. Kennedy School of Government.
- Bernard J Laurens & Rodolfo Maino, 2007. "China; Strengthening Monetary Policy Implementation," IMF Working Papers 07/14, .
- Chou, W. L. & Shih, Y. C., 1998. "The Equilibrium Exchange Rate of the Chinese Renminbi," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 165-174, March.
- Enrica Detragiache & Eisuke Okada & Ashoka Mody, 2005. "Exits from Heavily Managed Exchange Rate Regimes," IMF Working Papers 05/39, .
- Eswar S Prasad & Qing Wang & Thomas Rumbaugh, 2005. "Putting the Cart Before the Horse? Capital Account Liberalization and Exchange Rate Flexibility in China," IMF Policy Discussion Papers 05/1, International Monetary Fund.
- Barry J. Eichengreen & Inci Ã–tker & A. Javier Hamann & Esteban Jadresic & R. B. Johnston & Hugh Bredenkamp & Paul R Masson, 1998. "Exit Strategies; Policy Options for Countries Seeking Exchange Rate Flexibility," IMF Occasional Papers 168, International Monetary Fund.
- Zhang, Zhichao, 2001. "Real Exchange Rate Misalignment in China: An Empirical Investigation," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 80-94, March.
- Jaime R. Marquez & John W. Schindler, 2006. "Exchange-rate effects on China's trade: an interim report," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
- Alan Ahearne & Jean Pisani-Ferry, 2006. "The Euro: only for the agile," Policy Briefs 42, Bruegel.
When requesting a correction, please mention this item's handle: RePEc:bca:bocadp:08-5. 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: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.