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Capital Account Policies and the Real Exchange Rate

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  • Olivier Jeanne

Abstract

This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of Chinese capital account policies.

Suggested Citation

  • Olivier Jeanne, 2012. "Capital Account Policies and the Real Exchange Rate," NBER Working Papers 18404, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18404
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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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