U.S. monetary policy and China's exchange rate policy during the great recession

Juha Tervala

International Journal of Finance & Economics, 2019, vol. 24, issue 1, 113-130

Abstract: I examine the transmission of expansionary U.S. monetary policy in cases where emerging economies—including China—peg their currencies to the dollar. I evaluate the value of the dollar peg as a fraction of consumption that households would be willing to pay for the dollar peg to remain as well off under the dollar peg as they would be under a flexible exchange rate. The value of the dollar peg is typically positive for the dollar bloc because the United States can no longer improve its terms of trade at the dollar bloc's expense. This provides a rationale for fixing the exchange rate. The dollar peg is typically harmful to the United States, providing a rationale for criticism of China's exchange rate policy during the Great Recession.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1002/ijfe.1652

Related works:
Working Paper: China, the Dollar Peg and U.S. Monetary Policy (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:24:y:2019:i:1:p:113-130

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().