Currency Internationalization and the International Price System

Hailong Jin (), Wisdom Takumah and Josiah Jorenby
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Hailong Jin: South Dakota State University
Wisdom Takumah: Emory University
Josiah Jorenby: South Dakota State University

International Advances in Economic Research, 2018, vol. 24, issue 4, No 1, 303-309

Abstract: Abstract Although China, now the world’s second largest economy and largest goods trading nation, has rolled out the ambitious currency internationalization protocol while maintaining strict capital controls for nearly a decade, the implications of this unique reform path on the international economy still present uncertainties. In this paper, we fill in this gap by developing a two country, two-goods model to investigate the impacts of currency internationalization on the international price system, which consists of goods market and factor market interactions. We propose a critical condition of sustainable currency internationalization and reveal high international price sensitivity to exchange rate adjustments.

Keywords: Currency internationalization; Currency intervention; RMB; E3; E5; F3; F4; F6 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11294-018-9711-y

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