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China and global rebalancing: A two-country approach

Agnès Benassy-Quere (), Benjamin Carton () and Ludovic Gauvin

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Abstract: Based on simulations of an original DGE model of the US and the Chinese economies under various monetary regimes, we show that an overhaul of China's social safety net is capable of reducing global imbalances whatever the exchange-rate regime, provided international capital flows are allowed to react to expected return diff erentials, which requires some relaxation of capital controls. Exchange-rate flexibility would accelerate the rebalancing, but not make it larger. A monetary reform would fail to rebalance the economy unless the government simultaneously acts to curb NFA accumulation through consumption-enhancing reform or reducing its objective in terms of reserve accumulation.

Date: 2013-09
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00825239
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Published in China Economic Review, Elsevier, 2013, 26, pp.118-139. ⟨10.1016/j.chieco.2013.04.005⟩

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Journal Article: China and global rebalancing: A two-country approach (2013) Downloads
Working Paper: China and global rebalancing: A two-country approach (2013)
Working Paper: China and global rebalancing: A two-country approach (2013)
Working Paper: China and global rebalancing: A two-country approach (2013)
Working Paper: Rebalancing Growth in China: An International Perspective (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseose:hal-00825239

DOI: 10.1016/j.chieco.2013.04.005

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