RMB Exchange Rate and Local Currency Price Stability: The Case of China and ASEAN+3

Xiao Bing Feng
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Xiao Bing Feng: AJRC

Macroeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: This paper uses Chinese and ASEAN+3 industry panel data to measure variations in mark-up adjustment behaviour that is associated with the exchange rate changes across export destination markets. Exports that are substitutes for local products exhibit a high degree of mark-up adjustment, which has the effect of stabilising prices in export destination countries. There is evidence of this behaviour in certain export products to China where the Chinese Government provides subsidies. When markup adjustment behaviour exists, the short-term dynamic mark-up adjustments are consistent with the long-term pricing behaviour in source countries.

Keywords: RMB Exchange Rate; Local Currency Price Stability; China; ASEAN; ASEAN+3 (search for similar items in EconPapers)
JEL-codes: F31 F40 O24 (search for similar items in EconPapers)
Date: 2006-01
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