A Darwinian Perspective on “Exchange Rate Undervaluation”

Qingyuan Du and Shang-Jin Wei

No 456, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper studies how status competition for marriage partners can generate surprising effects on the real exchange rate (RER). In theory, a rise in the sex ratio(increasing relative surplus of men) can generate a decline in the RER. The effect can be quantitatively large if the biological desire for a marriage partner is strong. We also provide within-the People’s Republic of China and cross country empirical evidence to support the theory. As an application, our cross-country estimation suggests that sex ratio as well as other factors in the existing literature can account for the recent evolution in Chinese RER almost completely.

Keywords: currency manipulation; equilibrium real exchange rate; surplus men (search for similar items in EconPapers)
JEL-codes: F31 F42 J10 J70 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2015-10-07
New Economics Papers: this item is included in nep-cna, nep-opm, nep-sea and nep-tra
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Related works:
Journal Article: A Darwinian perspective on “exchange rate undervaluation” (2016)
Working Paper: A Darwinian Perspective on "Exchange Rate Undervaluation" (2012)
Working Paper: A Darwinian Perspective on "Exchange Rate Undervaluation" (2011)
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