The Debt-adjusted Real Exchange Rate for China
Jan Frait () and
Lubos Komarek ()
The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
The paper aims to enrich the debate on the overvaluation/undervaluation of China yuan Renminbi (CNY) against USD and JPY by applying the concept of the Debt-Adjusted Real Exchange Rate (DARER). This approach is offering to monetary policy makers another indicator for more responsive management of this important economic variable. The general motivation for constructing DARER is the fact that long-term current account surplus (deficits) is linked with capital outflows (inflows), which often leads to real undervaluation (overvaluation) of domestic currency. DARER can signal to the authorities that the real exchange rate is becoming unsustainable in the medium term. Based on the DARER approach we also introduce three indicators of exchange rate misalignment.
Keywords: Exchange rate; current account; misalignment; China; DARER (search for similar items in EconPapers)
JEL-codes: E58 F31 F32 F37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-cna, nep-ifn, nep-mac, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp_850.pdf
Working Paper: The Debt-adjusted Real Exchange Rate for China (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:850
Access Statistics for this paper
More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().