Revaluation of the Chinese Yuan and Triad Trade: A Gravity Assessment

Miaojie Yu ()
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Miaojie Yu: Peking University

Chapter Chapter 2 in Exchange Rate, Credit Constraints and China’s International Trade, 2021, pp 31-53 from Springer

Abstract: Abstract The literature has paid little attention to the endogenous nexus between exchange rates and bilateral trade. In this chapter, I use a gravity model to investigate the two-way causality between exchange rates and bilateral trade with data from China, Japan, and the US during the 2002–2007 period. After controlling for the simultaneous bias between exchange rates and bilateral trade, the extensive empirical evidence shows that the revaluation of the Chinese yuan against the dollar significantly reduced China’s exports to the US but had no significant effect on China’s exports to Japan. These findings are robust to different measures, econometric methods, and period coverage.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-7522-8_2

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DOI: 10.1007/978-981-15-7522-8_2

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