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Just how undervalued is the Chinese renminbi

Michael Funke and Jörg Rahn

No 14/2004, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: Given that the value of China s currency has been hot topic recently, this paper explores the equilibrium levels of China s real and nominal exchange rates.Employing a Johansen cointegration framework, we focus on the behavioral equilibrium exchange rate (BEER) and permanent equilibrium exchange rate (PEER) models.Our results suggest that, while the renminbi is somewhat undervalued against the dollar, the misalignment is not nearly as exaggerated as many popular claims. JEL Classifications: F31, F32, F41, C32 Keywords: Renminbi, Yuan, China, Exchange Rate, Equilibrium Exchange Rate

JEL-codes: F31 F32 F41 C32 (search for similar items in EconPapers)
Date: 2004-10-01
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Published in Published in World Economy vol. 28, no 4 (2005), pp. 465-489

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