Measuring Renminbi Misalignment: Where Do We Stand?
Menzie Chinn () and
Eiji Fujii ()
No 242010, Working Papers from Hong Kong Institute for Monetary Research
The value of China's currency, the renminbi (RMB), and the conduct of China's exchange rate policy have generated intense debate in academic and international policy circles. Despite the accumulation of empirical evidence regarding the degree of RMB misalignment over the past few years, the debate continues unabated. In this study, we highlight the challenges to properly assessing the nature and degree of currency misalignment, in terms of the choice of the model, the method of calculation, and data uncertainty. In particular, we demonstrate the susceptibility of misalignment estimates to model selection and data revisions. Further, we explicitly discuss the implications of sampling uncertainty for determining the extent of RMB misalignment.
Keywords: Absolute Purchasing Power Parity; China; Currency Misalignment; Sampling Uncertainty; Data Revision (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 31 pages
New Economics Papers: this item is included in nep-mon and nep-tra
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