The Overvaluation of Renminbi Undervaluation

Yin-Wong Cheung, Menzie Chinn and Eiji Fujii

No 112007, Working Papers from Hong Kong Institute for Monetary Research

Abstract: We evaluate whether the Renminbi (RMB) is misaligned, relying upon conventional statistical methods of inference. A framework built around the relationship between relative price and relative output levels is used. We find that, once sampling uncertainty and serial correlation are accounted for, there is little statistical evidence that the RMB is undervalued. The result is robust to various choices of country samples and sample periods, as well as to the inclusion of control variables.

Keywords: absolute purchasing power parity; exchange rates; real income; capital controls; currency misalignment. (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2007-06
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (140)

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Related works:
Journal Article: The overvaluation of Renminbi undervaluation (2007)
Working Paper: The Overvaluation of Renminbi Undervaluation (2007)
Working Paper: The Overvaluation of Renminbi Undervaluation (2007)
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