Will an Appreciation of the Renminbi Rebalance the Global Economy? A Dynamic Financial CGE Analysis

Jingliang Xiao () and Glyn Wittwer

Centre of Policy Studies/IMPACT Centre Working Papers from Victoria University, Centre of Policy Studies/IMPACT Centre

Abstract: We use a dynamic CGE model of China with a financial module and sectoral detail to examine the real and nominal impacts of a nominal exchange rate appreciation alone, fiscal policy alone and a combined fiscal and monetary package to redress China's external imbalance. The exchange rate policy alone is ineffective in both the short run and long run at reducing China's current account surplus. Fiscal policy is less effective than a combination of fiscal and monetary policy in reducing the surplus.

Keywords: dynamic financial CGE; foreign reserves; trade surplus; monetary policy; fiscal policy (search for similar items in EconPapers)
JEL-codes: D58 E52 E62 F31 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-cba, nep-cmp, nep-cna, nep-ifn, nep-opm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cop:wpaper:g-192

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