Structural Effects of a Real Exchange Rate Revaluation in China: A CGE Assessment
Dirk Willenbockel
MPRA Paper from University Library of Munich, Germany
Abstract:
The misalignment of the Chinese currency exposed by the rapid build-up of China’s foreign exchange reserves over the past few years has been the subject of considerable recent debate. Recent econometric studies suggest a Renminbi undervaluation on the order of 10 to 30%. The modest revaluation of July 2005 is widely perceived as insufficient to correct China’s balance-of-payments disequilibrium and has not silenced charges that China is engaging in persistent one-sided currency manipulation. Within China there are widespread concerns regarding the adverse employment effects of a major revaluation on labour-intensive export sectors, yet the likely magnitude of these effects remains a controversial issue. The paper aims to shed light on this question by simulating the structural effects of a real exchange rate revaluation that lowers the current account surplus-GDP by 4 percentage-points using a 17-sector computable general equilibrium model of the Chinese economy.
Keywords: Renminbi undervaluation; real exchange rate misalignment; applied general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: C68 F17 F40 (search for similar items in EconPapers)
Date: 2006-04
New Economics Papers: this item is included in nep-cba, nep-cmp, nep-cna, nep-ifn, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)
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Working Paper: Structural Effects of a Real Exchange Rate Revaluation in China: a CGE Assessment (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:920
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